Monday, 17 February 2014

Tax Organization Tips for a Business

Having a properly organized system of cataloging and classifying business expenses and other finances will go a long way in reducing the level of stress that is seen in companies when the end of the fiscal year is rapidly approaching. It will also reduce the amount of money that you would have to pay out to accountants and other bookkeepers Contractor Calculator, as they would not have to spend a lot of man hours trying to trace transactions that took place weeks ago.

A good system that records and stores all business transactions is also very advantageous when it comes to claiming tax benefits and tax breaks. The good system is the one that has categories for all manner of business expenses that are incurred by the business in its course of operation.
Some of the categories of business expenses include:

1)    Administration Expenses
These are expenses that are incurred by the management of the business as they represent the business in various meeting with outsiders. These expenses are tax deductible, as long as they were incurred in the course of doing business, and were not expenses related to personal use. Examples of such expenses include accommodation expenses in hotels during business trips, and the cost of transportation to meetings and conferences that are related to the nature of the business that the company is active in.
2)    Advertising and Promotions
Expenses that are tax deductible also include those incurred while advertising and promoting the business on the various media now available. This will naturally include the cost of making adverts for television, and for placing ads on the internet. It would also include the cost of setting up and maintaining a website for the business.

3)    Automobile Expenses
The cost of buying, maintaining and servicing cars and other vehicles purchased under the name of the company is a business expense that is also deductible by law. It is also important to note that in this category, any expenses that are made by the business to improve the aesthetic appearance of the car while not helping the business expand its reach or engage in business activities would not be accepted by any revenue collecting activity. All expenses have to have a commercial reason behind them; otherwise they will not be tax deductible and even presenting them in your tax forms might lead to penalties that could harm the financial muscle of your business.

4)    Employee Benefits
Many of the benefits that a company avails to its employees can also be presented as the cost of doing business and can thus be used to apply for a tax break or a tax benefit. Examples of some of these benefits that employees enjoy include insurance benefits Contractor umbrella calculator, housing and hardship allowances.

5)    Office Costs and Legal Fees
The cost of procuring items to be used by the business in its official capacity is also tax deductible. The business expense of hiring professionals like lawyers and accountants is also an expense that can comfortably be used to claim a tax break from the government.

How to Run a Limited Company

There is a sense of pride in being able to have your own limited company. It implies a sense of well being. It also makes you feel as if you are in full control of your own destiny. However, if you are not adept at running your own limited company Contractor Calculator, then you are bound to get into a very deep hole that will be hard to escape from. There are a few tips that could help you a lot in running your own limited company. Some of these tips include:

1)    Realize that your company is a separate legal entity
It is very important to internalize and understand the fact that your company is an independent person under the eyes of the law. This means that your liability in the event of a financial loss or harm to other individuals will be limited to the extent of the capital that you had put in at the start of the limited company. This does not give a person the right to engage (knowingly) in harmful activities that could cause harm, grief or suffering to others. The law expects that a limited company will be run well and safely by its directors.
2)    Contracts are entered into by the Company
Any and all business operations are supposed to be conducted in the name of the company and not in your name. Therefore, there should be a clear distinction between the assets of the company and the assets that belong to you. This means that the company should also have its own separate and distinct bank account. The bank account number of the company is the number that will be used by clients to pay the company for its services. Having the same bank account as the company could lead to trouble with the authorities.

3)    The Handling of Expenses is Very Important to a Limited Company
Each and every expense that is incurred by the company will have to be recorded in a neat and organized manner that will allow people not associated with the business ( like tax collectors) to go through your records and ensure that your company is complying with the tax code and is not involved in any illegal activities.

As such, receipts for each and every transaction conducted in the name of the company should be saved and filed away for future reference. Having the receipts is useful as they can be used to claim tax benefits at the end of the fiscal year. The advantage of running your own limited company is that you can enjoy certain tax breaks and benefits that are accessible only by those running limited companies. However Tax calculator for contractors, these tax breaks and benefits are only issued to transactions that were made for a commercial reason.

4)    Engage the Services of a Lawyer and an Accountant
It is also important to engage the services of a qualified and experienced lawyer and accountant. The lawyer will offer legal advice, especially when it comes to creating and signing contracts, while the accountant will help in managing the financial aspect of the limited company.