Once a year, businesses of all sizes in every industry have to file their tax returns. It’s not the most pleasant job, but it has to be done, wherever you are in the world. For small businesses who only record a small turnover, the amount of tax paid can vary, so it is very important to know how much corporate tax you have to pay.
To determine the amount you have to pay, look at how much money you have earned in the most recent financial year. The corporate tax rate in the UK is currently 19{ee2a2ced2e83a70af3b12a5f5f4bc88f1c095ae1846c54ee750c7ec9c020c045}, although it goes up slightly depending on how much profit (if any) a business makes. In the US, it is just below 40{ee2a2ced2e83a70af3b12a5f5f4bc88f1c095ae1846c54ee750c7ec9c020c045}.
Other taxes that businesses may have to pay include national insurance for any employees and, in some countries, property tax. Do an inventory of what you need to pay tax on before calculating your final bill.
Tax relief
For businesses that have only just been set up or operate on a limited income, there are some forms of tax relief available. Cuts to business rates for British SMEs were announced last year, coming into effect this year. Incentives for small businesses to hire new staff sometimes come in the form of tax relief, so it is advisable to see what is available.
Any SMEs unsure about what relief schemes are available to them would be well served to contact their local authority or national tax service, be it the IRS or HMRC. Looking for legal advice is a must where corporate tax is concerned. Corporate tax law advice from Withers Worldwide would be useful for small businesses.
Paying tax
Once you know what sort of taxes you should be paying, the next and most important step of all is, of course, payment. In each country, there is a window in which you must pay corporate tax. Small businesses who make profits below £1.5m per financial year, have to pay tax nine months and one day after the end of an accounting period. This period starts on the date a business was set up.
The most common (and arguably the simplest) payment method is via direct debit or bank transfer. This can be done online or over the phone through your bank. You need to make sure that there is enough money in your bank account to pay the bill in full.
On the surface, business tax may seem pretty complicated. Fortunately, once you know what tax rate you have to pay and what, if anything, is taxable, you’ll be able to pay without fear of falling foul of the authorities.
