Today's topic is focused on one underused legitimate way of Saving tax with company benefits. Pay yourself and save personal and company tax. And yes, it's important as a business owner, you need to pay yourself. The conventional route to pay yourself is a blend of salary and dividends. In this episode I'm going to be looking at a legitimate area of tax planning that tends to be underused.
The mission of the show is for you to get better acquainted with your numbers like your numbers more so you can improve your money mindset, make money, save time, and enjoy doing what you're doing.
You as a business owner will want to serve your customers well. You want to make money in your business, and you want to pay as little tax, legally, as you can.
Paying yourself with benefits
When we talk employees, this can include yourself
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If you run your business as a sole trader as a self-employed individual, then benefits don’t apply to you as the owner, it will apply to people you employ. Your company is a separate legal entity from you as the owner. Your company pays tax on profits, tax on salaries, and your employees pay tax on earnings. Earnings include benefits.
This may be an influencing factor for you deciding whether you should run your business as a limited company. Check out previous podcast episodes on your business structure and tax in your self-employed business.
Tax free and trivial benefits
Firstly. If a cost is 100 per cent business, it’s normally a tax saving. There are things your business can pay for that aren’t business related but have a personal use.
The good news is that some benefits can be provided tax free. Done correctly, you can give gifts to you and your team and no tax to pay! Please welcome trivial benefits.
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Tax on taxable benefits
Tax free and trivial benefits have no tax consequence, for either your business or your employee. Your employee can include you
Many benefits, such as company cars, and medical insurance means that tax is due by you and your employee. However, it can still work out cheaper for your business to provide those benefits.
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In conclusion, providing benefits is a great way to pay you ad your staff, save tax, and all perfectly legally. Saving tax with company benefits for your business and staff is a positive move. Paying yourself via benefits route as well as cash is good tax planning
Your business needs to grow, serve and make money. How to pay you and your staff efficiently plays a vital part in you taking decisions, and what is right for your business. Contact us to find out more.
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In This Episode
- Understanding what benefits are
- Appreciate what the tax free and trivial benefits are
- Decision making and dealing with a benefit strategy
- Developing your own Numbers confidence and decisions
- Take more control of your numbers to help make you money, survive and thrive