With taxes being the bloodline of many governments, it’s only justifiable to levy penalties and fines to entities who aren’t paying their taxes correctly or on time or both. In the UK, it’s the HMRC of Her Majesty’s Revenue and Customs that collects taxes from anyone who is a resident or is domiciled in the jurisdiction. Only those who make less than £12,570 are considered tax-exempt. But if you’re a business owner who earns more than that, you’d need help from professional tax accountants Cardiff to maximise your tax savings while being legally compliant.

Here are seven of the most common mistakes that can make your business get in trouble with the HMRC.

Not employing the right business structure. The taxes you’ll pay as a business depend on which type of business are you — are you a sole trader, a limited company, or a partnership? For instance, if you’re a sole trader, you only need to pay income tax once it goes over a personal allowance of around £12,500. Choosing the most tax-saving and appropriate structure for your business is one area of expertise of accountants Cardiff.

Not paying your taxes within the prescribed deadline. In the UK, a private limited company is required to file a tax return within 12 months after their accounting period for corporation tax ends. If you’re new to self-employment, you have to pay your taxes for 2021-2022 by October 5 this year. Not paying on time is one of the most common reasons why you could get a tax penalty notice from the HMRC.

Not keeping records accurately and properly. As stated, you shouldn’t just pay taxes on or before the deadline. You should also do so accurately. And for you to accomplish this, you have to ensure that the records you’ve kept have accurate details in the first place — backed by evidence such as receipts and invoices.

Not presenting proof to back up your tax claims. If you ask accountants Cardiff, one of the best ways to maximise your tax savings is to correctly claim whatever tax incentive or tax break your business is entitled to (e.g. Capital allowances, entrepreneurs relief). But to avoid getting fined by the HMRC for incorrect tax payments, you have to present proof that will justify the claims that you’re filing.

Not separating personal finances from your business. Mixed-up personal and business accounts can quite be headache-inducing — and, not, to mention, costly. Using these accounts interchangeably can make you pay taxes that you shouldn’t have paid and vice versa.

Not paying employees appropriately. If you’re running a business that has employees other than yourself, you can be tempted to pay them "under the table" just to minimise payroll taxes. Payroll taxes can be expensive. But the consequence of not paying these taxes correctly is way more costly — finance- and reputation-wise.

Not consulting with a tax professional. Proper tax planning is key to leveraging your tax incentives, maintaining a good reputation before the HMRC (and your customers, employees, and partners), and boosting your bottom line. Hiring experienced tax accountants Cardiff is one investment that yields great returns both in the short and the long run.

Advantage Accountancy & Advisory has some of the most trusted and experienced accountants Cardiff. If you are looking for tax accountants Cardiff, contact us today.