Ask Andrew
Andrew rhodes of award winning accountants sobell rhodes LLP answers your business questions.
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Award Winning Accountant ANdrew rHodes
My wife and I run a business together. What is the most tax e?cient way for us to take income from our business? If you and your wife both work full-time in the business you will normally minimise your tax and National Insurance bill by sharing pro?ts equally. As a partnership you are taxed on the actual pro?t. The drawings that you and your wife take from the business are not taken account of. You should ensure that you claim tax relief on all expenses that are wholly and exclusively for the business. This can include use of home as o?ce, motor and travelling expenses etc. If your pro?ts are over £60,000 per annum then you should consider converting your business to a limited company. It could then be possible to minimise your tax and National Insurance liabilities through a combination of salaries, dividends and bene?ts in kind. You can further reduce your tax liabilities by establishing a value for goodwill on the transfer of your business to the limited company. I have been running my business for many years but my pro?ts are now reducing due to ever increasing pressure from competitors charging lower prices. What do you suggest I do? The ?rst thing you should do to get your business back on track is a SWOT analysis. This will help you identify your Strengths, Weaknesses, Opportunities and Threats. For example; what are your unique skills? What are you poor at? What opportunities are there for you to raise prices? What niche markets could you explore? Where are you most under threat from your competitors? You can do this together with your team but it’s even more powerful when you do it with a trusted advisor or friend who has your best interests at heart and is not afraid to ask di?cult questions. From this you can start to create a one, three and ?ve year business plan that predominantly focuses on providing your customers with great value and more pro?t for you.
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To receive your Free copy of Andrew’s report ‘The 5 Biggest Headaches Facing Business Owners and How to Overcome Them’ go to www.sobellrhodes.co.uk
sobell rhodes LLP | winners of the British Accountancy Awards Andrew rhodes | uK Managing Partner of the Year [email protected] | 020 8429 8800
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