Tax Efficiency; How to Make Your Business Tax Efficient

Regardless of its size, every business should strive to become as tax efficient as possible. Identifying ways to minimise your business tax legally can enhance your cash flow, increase your margins, and fortify your overall business model. Make sure you have a firm grip on the taxes you have to pay so that you don’t spend more than you need to. 

What Taxes Do Businesses Need to Pay?

The taxes levied on your business primarily depend on your business’s structure. If you’re a partnership or a sole trader, you will mainly have to pay income tax.

Nevertheless, if your business is structured as a limited company, the tax arrangement gets slightly more complex. The company itself (a separate legal entity from you) has to pay corporation tax on any profit it earns. You then have to determine how to withdraw an income from the business – on which you might be taxed again.

Other taxes your business might have to pay to include value-added tax, national insurance contributions, business rates, etc.

How to Make Your Business Tax Efficient

Here is a list of tips to make your business tax efficient.

1. Meet Tax Deadlines

If you are running a limited company, ensure you submit your tax returns, annual accounts, and Companies House paperwork correctly and within the specified deadline to clear penalties.

If you are part of a partnership or working as a sole trader, you must submit your self-assessment return by the 31st of January every year. In addition, you have to pay any tax obligations by the same date. If you have untaxed income or are a company director, you will even have to file a personal tax return.

2. Maintain Business Records

Maintaining accurate business records and keeping your receipts and invoices safe are imperative. According to HM Revenues & Customs, you need to keep all your business records. Thanks to the availability of cloud storage, you can quickly secure your documents within your digital accounting software account.

3. Benefit from Tax Reliefs

There are several tax reliefs available to facilitate business growth. Find out which of the following you might be eligible for.

1. Research and Development

The UK government lets businesses use tax credits for research and development work.

2. Patent Tax Relief

You can also claim tax relief on profits earned through patented inventions.

3. Employment Allowance

Businesses that pay Class 1 National Insurance can save up to £5,000 annually through this bill.

Hire an Accountant to Make Your Business Tax Efficient

An experienced accountant might become your most important advisor and help you save money. They will be able to advise which business structure is most suitable for you and offer suggestions on the most tax-efficient methods to draw down money from your business.

If you don’t have the assistance of an accountant, there’s a risk that you might end up paying more (because you don’t want to spend too little and get penalised by HMRC).

Book your free appointment with ISA Consortium

For more information and professional advice, please get in touch for a free appointment. We will discuss all the needs of you and your business, and head you in the right direction for future business .

All this and more

We offer all the above as part of our full Tax Services and Accounting and can also help you with Capital Gains Tax, Inheritance Tax, Retirement Planning, even filling out your Self-Assessment Tax Returns for you.


Please fill out the form below and we’ll be in touch to discuss your requirements further:

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