Starting a business can be extremely rewarding, it offers budding entrepreneurs the opportunity to control their finances and working hours for the very first time.

However, for every successful small business there are a number that fall foul of tax legislation, either by failing to register or unwittingly filing incorrect information. This can lead to disputes with Her Majesty’s Revenue and Customs (HMRC), which tarnish what is an otherwise exciting time in a new business owner’s career.

It is important to understand taxation, including claimable expenses and other issues relating to HMRC regulations, prior to starting any business venture.

The importance of tax management

The issue of tax avoidance has been widely reported in recent months and since 2009 the government has tasked HMRC with keeping a tighter control on companies and their taxes, in addition to modernizing and standardizing the procedures for collecting tax and introducing more stringent penalties.

All of this has had massive implications for small businesses especially, as regulations have become stricter and checks even more thorough. As the number of compliance officers and specially trained ‘tax task forces’ increases, so does the importance of keeping legitimate and thorough records; in fact the issue of taxation dominates most small business and can be the cause of much anxiety, not to mention confusion.

Common tax issues

Understanding tax and its legal implications can be complicated and overwhelming, especially for smaller companies just starting out.

One of the most common issues facing small businesses is that of calculating employers tax contributions, as well as knowing exactly when to make a payment to HMRC. For those who are unsure it can be easy to complete paperwork incorrectly or even miss a tax deadline altogether. Other pitfalls of self-assessment taxation include poor record keeping, misclassifying other members of the workforce or failing to correctly disclose expenses.

Many people are unaware of the implications of incorrect tax management or may simply be anxious about making mistakes. It is imperative that small businesses and sole traders seek the assistance of specialists who understand tax management and business legislation and who will ensure they remain within the law.

Keeping well informed – help is on hand

There are a number of agencies to turn to for assistance when it comes to taxation, including the Citizen’s Advice Bureau, independent financial advisors and even online troubleshooters. They are able to work with small businesses and the self-employed to explain tax management, assist with calculations and advise on payments, as well as offering guidance on trading laws.

Help is also available anyone who finds themselves in the middle of a dispute with HMRC. Dedicated organizations, such as TT Intelligence, will tackle even the most complicated of tax case. These companies specialize in tax management and ensure that complex disputes are settled quickly and amicably with the best interests of the small business in mind. Defence can be offered in cases of late payments, miscalculated tax, applications for closure, appeals and tribunals and outstanding penalties. Guidance can be given regarding time limits for Discovery/Jeopardy assessments, overseas assets and other confusing aspects of tax legislation.

It has never been more important to keep well informed regarding taxation legislation. However, with the right assistance and efficient record keeping, tax needn’t be intimidating.