Income Tax and Corporation Tax Planning Tips for Busines Owners

Income Tax and Corporation Tax Planning Tips for
Business Owners

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With the tax deadline approaching, we’ve put together a checklist to ensure you’re taking advantage of all available tax breaks before the end of the year:

Business Taxes

Examine your accounts figures before the end of the year to plan any closing transactions that will allow you to take advantage of tax breaks, such as depreciation.
Consider deferring capital expenditures that qualify for capital allowances in order to receive the allowances sooner.
Claim home business expenses such as computer equipment and internet access.
Any assets you own personally but use for business purposes should be sold to your company (e.g. computer equipment). The company may be able to pay you tax-free.
Consider incorporating if you’re a sole trader to take advantage of lower corporation tax rates.
Check to see if any qualifying pre-trading expenses have been claimed for tax relief. This is something that is frequently overlooked.
Offset trading losses with other sources of income.
Check to see if you qualify for corporation tax start-up relief for new businesses.
Individuals can get tax relief if they start their own business

Employees

Ensure that all family members who work in the business (spouses; children of working age) are paid a salary for the work they do.
Benefits in kind that are tax-free (subject to certain conditions):
Pay a €500 tax-free non-cash bonus to directors and employees each tax year.
Purchase a travel ticket for your employees on a monthly or annual basis.
Allowances for e-working and working from home
Job-related education and training
Director eligible for Bike to Work Program
Meals in staff canteens – if available to all employees
Once a year, you should have a medical checkup.

Income Tax

Any tax you owe in 2020 that was not already paid in your preliminary tax the previous year is referred to as the balance of tax.

You will also have to pay a surcharge of 5% of your tax due up to €12,695 (within two months of the deadline) or 10% of your tax due up to €63,485 if you file your tax return after the deadline (after 2 months past the tax return deadline).

The deadline of November 17th, 2021, is only for those who use ROS to submit ALL of the following:

Fill out and submit Form 11 for 2020 online.
Online payment of the balance of your 2020 income tax bill
Preliminary tax for 2021 can be paid online.

Your return and payments are due by the 31st of October if only one of the above is completed via ROS.

Remember that your tax return, as well as your payment, must be submitted by the deadline. If you don’t, you could face a surcharge, interest, and penalties.

Expenses that are tax deductible include:

Fees for accounting services
Advertisement costs
Costs of insurance
Company formation costs, for example, are an example of legal and professional costs.
Expenses incurred prior to trading
Wages, including the salary of the director
Rent, car, and phone
Uniform and protective clothing

How I Know If My Tax Return Is Correct?

You must file an income tax return using self-assessment if you are required to do so. This can be a stressful experience because late filing or submitting an incorrect return can result in significant penalties. That is why, before filing your annual income tax return, we always recommend consulting a tax professional.