Originally written by Stuart Clark on Small Business
As we head towards a new tax year, it always surprises me how many tax myths small business owners believe, when knowing the truth could actually put more money in your pocket.
Did you know for example that (depending on your circumstances) you could potentially extract over £25,000 tax free from your company (in fact better than tax free as the company can get corporation tax relief so the cost is less than £21,500).
This often means speaking with professionals (your accountant and/or IFA) but here are some quick small business tax myths and tips:
#1 – There is no difference between taking salary and a dividend
Some while ago I did a video that demonstrated increased cash in hand for the business owner of almost £6,000 on profits of £50,000 (based on 2019/20 tax rates). What would an extra £500 a month allow you to do?
#2 – I can just take money out the company when I want, and the accountant will sort my dividends out when I do my year end accounts
This could be illegal and open the company up to PAYE liabilities. Backdating dividends is illegal. It is vital that tax planning is done