Self-Employment: Top Tax Tips for Small UK Businesses
When you first get into business, the primary focus is on growing profits and expanding. You want to establish yourself. But, what about savings? What happens if your business hits a rough patch? How do you survive? Insurance and savings is your safety net. Here’s how to protect yourself, and your livelihood.
Get The Right Kinds Of Cover
When you’re self-employed, there are many types of insurance you should consider. Some of that insurance is mandatory, while some of it is optional. For example, if you employ anyone outside of close family, you must have employer’s liability insurance. This type of insurance covers you if an employee makes a claim against you.
Let’s say an employee breaks her arm while on the job. She may come to you to help her pay your medical bills. But, maybe you believe that she was acting in a way that caused the accident and that you shouldn’t be held liable.
She sues you. You need to defend yourself. This is what the insurance will cover.
Other useful covers include product liability, professional indemnity insurance, and stock cover, office equipment and contents cover, and turnover protection.
Legal Considerations That Could Save You Money
Before you get too excited about starting a business, you should consult with a lawyer. According to Slater and Gordon, an employee suing you is one of the biggest threats to the stability of your company.
A single slip and fall could put your company in jeopardy. And, if you don’t have representation, you’re at a serious disadvantage. Having a company lawyer on retainer is something you’re going to want, even if you’re a small operation.
It’s not just your employees either. Customers could sue you if a product is defective or if someone doesn’t like the advice you gave them.
A lawyer can also help you navigate the tax laws in the UK and save you money.
Buy Life Insurance With Value Plans
Looking to save money? Life insurance with value plans could potentially decrease the amount of tax you pay because, while income used to pay premiums is taxed, the money inside the policy is not. And, the money can be used to grow and expand your business without paying tax on the interest earned in the policy.
Speak with a life insurance agent about setting up a high cash value policy. These policies typically have a high value in the early years of the policy, are sometimes blended with convertible term insurance to reduce the cost of insurance, and always emphasise the living benefits of the contract over the death benefits.
Save Money By Reducing Costs
Save money in your business by claiming use of your main residence if you use it as an office. You can also write down many business expenses, and some insurances, from your income, lowering the amount of takings subject to taxation.
Keep records of your self-employed business for at least 6 years after the tax year you filed.
Make sure you always declare the income you make, even when you don’t make a profit in your business.
Thomas Sinclare has held several senior positions in relation to tax planning. He is always delighted to share his ideas and insights with others online. His thoughts and tips on this complex subject have appeared on a variety of different online resources.