It’s the eternal battle, between the hard-working business owner and the taxman. It’s always been the case but lately, there seems to be a trend that we could all do without. The UK is at its highest taxation level since modern records began. This brilliant nation of innovation and small businesses is currently undergoing some strange happenings. A Conservative is Prime Minister but there’s nothing Conservative about her. Businesses should have their corporate tax income rate slashed to around half of what it is to make sure there’s more chance of success. We all know what happens with the profits businesses make. Most of it goes to tax, the rest goes back into the business. You’re only able to fund your next products and services if you have the money to pour into your research and development department. So how can you keep more of the money you earn as a business?
The proper classification
First of all you need to make sure you are in the proper classification. Just because you may earn a lot of profit, does not automatically fit you into the ‘large’ business category. It’s complex, but HMRC has a system whereby you register your business and according to your income bracket and the number of people you have hired, you’ll be put into one of many categories. A micro business is usually no more than 5 or 10 employees. A small business can be up to around 10 to 50 employees, while also having a base or two abroad. A medium sized business can be from 50 to 250 employees. Anything above 250 employees is seen as a large business. And even still, if you’re a large business but only domestic, you can’t be seen the same as a multinational corporation. So make sure you know which category you are in.
The government is not an entity that cannot be challenged like some holy church. You should always know what your rights are as a business. If you’re ever in doubt of being treated fairly by HMRC then speak to solicitors who specialize in business. It could be that a case is being brought up against you by a customer and the court system has the final say. You’ll need a legal team to fight for your reputation to not be slandered. Maybe you were taxed too much and HMRC categorized your business wrongfully. Then you will need to take the case up in court to get your money back. The solicitors handle business taxation cases all the time and know this area of business law very well.
Always be lean
Small businesses have a tendency to try and expand too quickly. Safety does not always come in numbers and hiring too many employees can eat away at your profits. Instead you should hire employees with multiple skills which can be implemented in your various departments.
The amazing nation that is the UK, is the centre of innovation and the flame of business spirit. However you need to fight your corner and make sure you’re not being taxed to the hilt by HMRC.