Nibletz Staff
‘The taxman’s taken all my dough, and left me in this stately home, lazing on a sunny afternoon.’ Fifty-one years later, and The Kinks aren’t the only people getting screwed by the taxman. Yep, even in 2017 the taxman is still having his way and taxing small businesses for a ride. As an SME, you would love to reduce your bill to almost zero, but it’s almost impossible. You can lower your contributions and save money, but you have to know tax inside out first. With that in mind, here are the most important taxes and how you can push back.
Income Tax
Income tax is an individual tax that the government takes from your wage. As the boss, you are bound to take a wage, so this is a very important tax. In the US, the threshold for income tax is $9275, which is pretty low. On this amount, you will have to pay ten percent income tax, and the percentage increases depending on how much you earn. The trick to lowering your income tax is to pay yourself without triggering the tax. If you structure your business correctly, you can, legally, lower your contributions. Anyone that doesn’t understand business structures should look at this guide.
Corporation Tax
Corporation tax is a tax on your profits. As soon as the business starts to make a profit, it will have to pay up. And, because there is no threshold, there is no cool down period. In regards to corporation tax, you can make a couple of bucks profit and still have to pay the government their due. Of course, you don’t have to pay if you don’t make any profit, which is a positive. Small businesses just need to focus on surviving, so making money a profit isn’t the most important thing. In your first year, breaking even is more important so you can worry about tax later.
Eco-Tax
Eco-tax is a new one because the world (apparently) is about to explode. There is no doubt the earth is getting warmer and global warming is real. And, there is no question that governments are laying the blame at the feet of businesses. As a result, a business has to pay tax on anything deemed dangerous to the environment. Thankfully, there is a way around this tax – don’t harm the environment. It sounds easy, and it is pretty easy. Haitham Alaini Yemen entrepreneur outlines how you can appease this tax with a vertical forest. Plenty of businesses, on the other hand, have lowered their output with green light bulbs. There is no need for a small business to pay an eco-tax.
Property Tax
Any business that operates from offices or retail premises has to pay tax on the building. The reason is simple – you have to pay rates on your home, so you have to pay rates on your business property, too. Thanks to the internet, there is no need to pay rates on your business for a very long time. Working from home, without any physical employees, means you will be exempt from this tax. Until you grow big enough to cope, you can work remotely and still grow.
Taxes are mandatory, but how much you pay isn’t mandatory.
