Income Tax and Corporation Tax Planning Tips for Business Owners

With the tax deadline approaching we have compiled a checklist to ensure that you are availing of all the relevant tax opportunities before the end of the year:

Business Taxes

  1. Review your accounts figures before your year end to plan any closing transactions to avail of tax opportunities, e.g.
    1. Consider bringing forward capital expenditure that qualifies for capital allowances – to get the allowances earlier.
    2. If your accounting period end is 31 December any pension contribution you intend to pay must be paid before 31 December to get a deduction in your accounts.
  2. Claim home business expenses e.g. computer equipment/broadband.
  3. Sell to your company any assets that you own personally, but use for business purposes (e.g. computer equipment).  The company can pay you free of tax
  4. If you are a sole-trader consider incorporating to avail of lower corporation tax rates
  5. Make sure you have claimed tax relief on any qualifying pre-trading expenses.  This is often overlooked.
  6. Offset trading losses against other income
  7. For new businesses check if you qualify for corporation tax start-up relief.
  8. Tax relief is available to individuals for setting up their own company – check if you qualify for seed capital relief

Employees

  1. Make sure that all family members (spouse; children of working age) who work in the business are being paid a salary for the duties performed.
  2. Tax Free benefits in kind (certain conditions apply):
    1. Pay directors and employees a tax free non-cash bonus of €500 per tax year
    2. Buy a monthly or annual travel ticket for your employees
    3. E working and working from home allowances
    4. Job related training
    5. Bike to work scheme: director eligible for scheme
    6. Meals in staff canteens – if provided for all staff
    7. One medical check- up per annum

Pension Contributions

  1. Employer Pension Contributions: employer contributions far exceed the limits that directors/employees can pay personally therefore consider a company pension scheme for directors/employees
  2. Pay pension contributions on behalf of family members working in the business
  3. Personal pension contributions paid before 31st October 2017 can be carried back and income tax relief claimed in 2016
  4. In low income years consider paying voluntary social security to retain entitlement to state retirement pension. 

Income Tax

  1. Pay your 2018 preliminary tax by direct debit from January 2018 – this is a good way to manage cash flow while paying your taxes on time
  2. Claim home carers credit (conditions apply)
  3. You can earn up to €14,000 tax free if you let a room in your house (conditions apply)

4 Year Deadline

  1. The 31 December is the four-year deadline for tax relief claims relating to the tax year 2013; for example, tax relief on:

Contact your OSK tax adviser Imelda Prendergast Director OSK on 01 439 4206 for more details or visit OSK Contracting or OSK Small Business Support .

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