Taxation Law for
Small Businesses.
Taxation law is a
complex and in-depth area of concern for the small business owner. With potential pecuniary and criminal
consequences, it is of paramount importance to ensure as a business owner, you
are familiar with the tax consequences in your jurisdictions, and the ways in
which you can minimize your liability. Call 855-913-0249 for tax consultation.
Whilst one of the most legally important things to understand as a small
business owner, taxation law also provides an excellent opportunity for saving
money and increasing profitability within a small business environment. In this article, we will look at some of the
main and most common tax implications of running a small business, and some of
the most effective ways of ensuring you pay less tax through your small
business operation. Call 855-913-0249 for tax consultation.

Tax regimes vary
from jurisdiction to jurisdiction, and the implications of running a small
business also vary, both in terms of the legal and financial requirements. Having said that, there are a number of
common elements that transcend jurisdiction and appear in numerous guises
across various systems that can be of use to the small business owner. One of the first things to consider as a
small business owner is to establish a limited liability company. The primary reason for this is that limited
liability companies usually provide a more relaxed tax regime as compared to
income tax liability. A sole proprietor
operating out-with the parameters of a corporate entity is liable to account
for profits as income, which can lead to a greater tax liability and potential
individual state contributions. As a
corporate entity, the owner can pay himself via share dividends, which carry a
lower tax liability and thus minimizing his overall liability to tax. This is significantly better than paying
oneself a wage, which bears the tax liability from both ends, i.e. the company
is liable to taxation as is the employee.

Another essential
for the small business owner is what is known as capital allowance. By means of capital allowance, business
owners can offset the acquisition cost of assets on a graduated scale in
accordance with the specific principles of the regime in question. This is in effect a deductible expense, which
ultimately minimizes yearly tax liability. There is a particular benefit in that many regimes allow an accelerated
relief for business assets. This can be
exploited to an extent by acquiring assets through the business, for example a
car, which can also be used for personal purposes. Rather than buying a car from personal
income, buying it through the company allows you to offset the amount of the
expense quickly against your business profits, which ultimately reduce your
liability to tax.

Before embarking
on any tax reducing strategies, it is important to ensure you are acquainted
with the specific laws of your jurisdiction to avoid running into trouble with
the authorities. In some of Europe, for
example, there is a requirement to declare any specific tax minimizing strategies to the government to allow for rectification of loopholes. It is important to ensure you are acquainted
with the specific laws to avoid potential criminal liability as a consequence
of ignorance.