Tax Tactics Which ever way you look at it, tax is deadly boring. But having some moustachioed prat from the Inland Revenue on your back is even worse. So here is how to avoid falling foul of the odious little man... Self-Employed or Limited Company? Choosing which affects, among other things, when and at what rate you pay tax, as well as what expenses you can claim. There are pros and cons to each. Self-employed people can defer tax for longer periods, whereas the main advantage to being limited is that if you go bankrupt, you’ll only be liable for the money you paid into the business. Self employed people on the other hand, will be pursued by creditors for their cash. Inform The Tax Man Starting up without telling your local tax and social security offices is only clever if you want to incur a massive tax bill when they inevitably find out a few months down the line. You may also be able to get tax relief on the cash you plough in. Register For V.A.T. Compulsory if you turnover exceeds £50,000 per annum. It may be worthwhile doing this at the outset, as not registering marks you out among competitors and suppliers as a ‘toy-town’ operator. Get An Accountant Getting advice on recording your business payments and receipts will cost you, but will save cash, hassle and ulcers in the long run. Record all business income in your books, including cash deals. It might be tempting to slip the odd wedge into your back pocket, but you’ll have to explain yourself if the tax man rumbles you. Keep Receipts Get used to asking for them for everything, so you have every bit of paper for every business expense come the end of the financial year, including bills, invoices, receipts, bank statements, cheque book stubs and till rolls. By law, you have got to keep them for six years, so it’ll pay not to rely on and old show box alone. Employees It might be tempting to pay them cash and keep them off the books, but it’s you’re job to deduct tax and National Insurance from their wages, then pay the revenue. Offset Expenses You may need to acquire office furniture, equipment or vehicles, but think first about how you acquire them. It’s easier to offset them against your monthly tax bill, for example, if you get them on credit, as opposed to paying cash. Don’t buy a flash new computer you don’t need just because there’s a tax break attached. Source: Judith Sandground, Business Link, Manchester.