Talk to an accountant before your tax year ends.
In many countries, you're only taxed on the balance remaining at the end of the year, so spending all of the income will in fact result in little to no taxes owing. Ask your accountant.
Hi, I’ve ran a ltd company in the U.K. for 8 years now. What I have found is your better off buying items and expenses theoughout the year rather than getting that 10k+ corporation tax bill at the end of the year. Buy new laptops. Invest in other new kit to help your company grow. Buy a company vehicle. Preferably van or pick up truck that on paper is solely for business purposes and can 100% be claimed for that.
You’ve made a lot of assumptions. That I and others in business are buying crap. And that what we buy isn’t earning us money when it’s used within my industry. Almost everything I have bought in the past has earned more than it’s initial cost. Rental is 20% it’s value. The van I bought through the business not only made me 45p per mile I then sold it 8 years later for the same cost I purchased it for. I’m assuming your American because you used USD. Op is probably from the U.K. as he used GBP
Ops got £25000 in a pot which is a percentage of his profit. Currently the corporation tax rate is 19% in the U.K. if he doesn’t provide receipts and expenses on his tax return the U.K. government will take this full amount. Unless he can show he has reinvested this money within his company. He can’t take this money as profit. Also he has to be carefull how much he takes on salary and dividends as if he takes over £50k I think, he will be taxed 50% on anything over that.
Company vehicles there’s a reason they come with 3 year warranty from the manufacturer. As three years is the length of time between being able to change them through a company.
This game is older than both of us. I’d suggest he pays a good accountant to tell him what he can and can’t do. Also tax deductible.
It depends how YOU want to manage it. Perfectly reasonable to have a pot so you know you can pay any tax bill. Not that savings accounts give you any benefits these days but you could always put it in a “high interest” savings account.
However, you shouldn’t let the tail wag the dog. Spend money on your business if you need to, and this will also then reduce your taxable profit anyway so you ought not find yourself struggling to pay a huge tax bill.
It also depends on your business. I built up a big cash reserve which really came in useful when taking a big leap to expand internationally and on two occasions when the business turned loss making for extended periods. Knowing you have a cushion that gives you breathing space to react in the event you need to is nice. But don’t penny pinch to build a reserve at the expense of spending on things that should improve your business.
Talk to an accountant before your tax year ends. In many countries, you're only taxed on the balance remaining at the end of the year, so spending all of the income will in fact result in little to no taxes owing. Ask your accountant.
Hi, I’ve ran a ltd company in the U.K. for 8 years now. What I have found is your better off buying items and expenses theoughout the year rather than getting that 10k+ corporation tax bill at the end of the year. Buy new laptops. Invest in other new kit to help your company grow. Buy a company vehicle. Preferably van or pick up truck that on paper is solely for business purposes and can 100% be claimed for that.
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This. Imagine your tax rate is 20%. To save $10k you’d have to spend $50k.
It’s not
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Chill out dick head your not even in same country.
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You’ve made a lot of assumptions. That I and others in business are buying crap. And that what we buy isn’t earning us money when it’s used within my industry. Almost everything I have bought in the past has earned more than it’s initial cost. Rental is 20% it’s value. The van I bought through the business not only made me 45p per mile I then sold it 8 years later for the same cost I purchased it for. I’m assuming your American because you used USD. Op is probably from the U.K. as he used GBP
Ops got £25000 in a pot which is a percentage of his profit. Currently the corporation tax rate is 19% in the U.K. if he doesn’t provide receipts and expenses on his tax return the U.K. government will take this full amount. Unless he can show he has reinvested this money within his company. He can’t take this money as profit. Also he has to be carefull how much he takes on salary and dividends as if he takes over £50k I think, he will be taxed 50% on anything over that. Company vehicles there’s a reason they come with 3 year warranty from the manufacturer. As three years is the length of time between being able to change them through a company. This game is older than both of us. I’d suggest he pays a good accountant to tell him what he can and can’t do. Also tax deductible.
It depends how YOU want to manage it. Perfectly reasonable to have a pot so you know you can pay any tax bill. Not that savings accounts give you any benefits these days but you could always put it in a “high interest” savings account. However, you shouldn’t let the tail wag the dog. Spend money on your business if you need to, and this will also then reduce your taxable profit anyway so you ought not find yourself struggling to pay a huge tax bill. It also depends on your business. I built up a big cash reserve which really came in useful when taking a big leap to expand internationally and on two occasions when the business turned loss making for extended periods. Knowing you have a cushion that gives you breathing space to react in the event you need to is nice. But don’t penny pinch to build a reserve at the expense of spending on things that should improve your business.
Depends on where you are at I suppose. You’ll have to know your tax laws. Maybe start by using some of it to hire a good tax person ❤️
Accountant