Tax Efficient Business Structures
What are tax efficient business structures? Well, they are an important way to reduce your overall tax liability. Tax is a business cost like any other and should be reduced using every legal means possible. Reducing your overall tax will have the effect of increasing your cash flow, improving your return on investment as well as increasing the value of your business. Having more cash means you can invest in your business to grow it, or you can take it for your own personal use.
There are a number of ways to structure your business, and what makes a tax efficient business structures depends on a number of criteria. The most important being what type of structure will be acceptable to your clients. The more complex your business and the larger the turnover/profit the greater the opportunity to look at different tax efficient business structures to reduce your overall tax position. Clearly, there are many commercial implications, as well as tax, which should inform your final decision on structuring your business.
If you are a property investor and pay tax at 40% or above then buying a further residential property in a limited company would be a tax efficient business structures for you as you will get full tax relief on interest payments. You may also want to look at ways to incorporate your existing properties to reduce your overall tax liabilities.
When looking at business structures to reduce tax it’s important not to fall foul of the General Anti-Abuse Rule, GAAR, introduced in 2013. This rule is designed to stop abusive tax arrangements and tax avoidance schemes where the primary purpose of the transaction is to not pay tax. Our tax accountants will provide you with HMRC compliant solutions to help you reduce your tax liability.
How can we help you?
At the Finance Equation we are passionate about helping our clients keep more of their money. If you are worried about your overall tax position our tax experts can definitely help you navigate the TAX maze to structure your business in the most tax efficient way.