Here’s a quick list of things to do and think about to make sure you are using your company efficiently from a tax perspective – the list isn’t exhaustive:
(1)Mobile phone provider – can you swap to a business contract? – contracts need to be between provider and your company and you will receive 100% tax relief. If you can’t end your personal contracts at the moment then you can make an expense claim via the company for your business use (but not line rental or inclusive call packages, so you can only do this if you can separately identify business calls). However, the most efficient thing to do eventually is take out new business contracts when you are able to.
(2)Start making as many business payments as possible using business debit card. This is the easiest way to keep track of expenses and will provide you with the best tax position.
(3)If you make any cash payments (e.g. taxis and other incidentals) then you should keep receipt and make a note on receipt of reason for expenditure and put in an envelope labelled with month of expenditure. You will then need to make an expense claim and transfer from the company to your personal bank account as a reimbursement of the expense. You should keep cash payments to a minimum as sometimes you can lose receipts and therefore forget to claim.
(4)Keep a note of business mileage and claim 45p per mile for first 10,000 miles, 25p thereafter.
(5)Start using Xero for your book-keeping, together with direct feed of transactions from your bank (if available) – kept up to date regularly you will be easily able to access up to date information to enable you to make day-to-day business decisions eg available profit for distribution by dividend
(6)Set-up a payroll to take out a tax efficient amount which will not attract NICs but will allow you to access state pensions and benefits when required.
(7)Consider paying yourself a market rent rather than HMRC agreed rates for use of home as office see here.
(8)Is there scope for putting some of your income through a sole-trade – up to £5,965 is the optimum amount before Class 4 NIC is attracted – there may be VAT pitfalls regarding splitting the business to be aware of here so take advice before going ahead.
(9)Tax free benefits – make sure that you buy any tech through the company, get your eye tests (not glasses) paid for, trivial benefits of £300 per year can be taken advantage of (must be less than £50 each and some other conditions), see my blog here
(10)Financial service products – pension (a good way to extract money from the company, but you won’t be able to get your hands on it until you’re at least 55!), life insurance (using relevant life cover schemes ,blogged about here,your company can pay for this rather than you yourself out of taxed income) , medical insurance can also be bought via the company.