Tax payment is something that you need to be prepared for. For first timers like you, this one could be very difficult. To help yourself, conduct some researches on how to reduce your tax liability. Here are some tips that might assist your regarding this:
1. Do bookkeeping for yourself
Firms or in-house accountants are being hired by larger businesses to manage all records of net and expenses. If anything goes wrong, the contracted firm or accountant will be held liable. Since you are a self-employed person, you need to protect yourself and keep excellent records, save all receipts and be able to support your deductions.
If you find it difficult, you can get help from a good accounting system and shake all the worries you’ve got about bookkeeping.
2. Keep track of business expenses
You will realize here the value of those small bits of paper which are called receipts. If you will notice, accountants always ask their clients to keep all receipts. To maintain good records, business expenses must be organized and supporting documents must be available.
3. Minimize the office space
You can deduct the percentage of your home that was used exclusively for business purposes. It should include the utilities such as mobile phone bills and internet connection. You can check some publications which will help you decide on this matter.
4. Keep transportation records
Deduct your mileage or any vehicle expenses that you used for business. If you also traveled out of time or country for a long time, you can add deduct more of your expenses. Here are some of those items:
- Half of meal’s cost
- Registration on meeting
- Parking fees
- Repairs and insurance
5. Report all office expenses
Deduct all of your expenses for office supplies. You can include all the items you purchased for the business. You can do it for the papers, pens, postage, envelopes and small equipments which are generally used or being consumed annually.
6. Report expenses from legal advisers
Financial advisers won’t sit and talk with you about your business if they won’t get paid. If you meet up with professionals like a lawyer, accountant, adviser and others, count down their fees. Include them on the report that you will be doing.
7. Depreciate properties
Depreciation refers to a decrease on the asset’s value. You can ask for an experts help to assist you on adding it to your report. Doing so will help you reduce your tax liability.
8. Pay yourself a minimal salary
Having a huge salary for yourself means that you are on a higher tax bracket. Keep track of all your income throughout the year and make changes to keep your tax in a lower bracket. Consult an expert to keep you informed about how this can be done.
9. Complete and submit the files on time
Make sure that the data you submit is complete with the necessary documents. Since self employed people can claim allowances and tax reliefs, it is important to keep all the files with you. Lastly, to avoid being charged of fines, submit your returns on or much better, before the deadline.