Top Tax Tips for Franchising
From French Duncan
Every franchise should review their financial affairs at least once a year, (a regular check-up to consider ways to reduce the tax burden,) and the best time to do this is a couple of months before the accounting year end. It pays to plan ahead rather than rush around at the last minute to get your affairs in order.
1. Self employed franchisees should always consider whether they would be more tax efficiently run as a limited company.
2. Review your sales ledger balances & make provision for any debts considered to be bad.
3. Capital expenditure incurred on plant and machinery qualifies for a 50% allowance in the first year, no matter how near to the year end it is purchased.
4. Sell expensive cars prior to the year end as this invariably results in a balancing allowance and a reduction in taxes.
5. Consider the payment of bonuses & strategy for payment of directors/shareholder remuneration.
6. Review your company car/van policy.
7. Pension contributions need to be paid before the year end to obtain tax relief.
8. Accelerate the completion of work prior to 31 March 2008 and 31 March 2009 when the corporation tax rate increases to 21% and 22% respectively.
9. Consider employing a spouse or partner in the business and make use of the unused allowances that he or she may have and the lower rate tax bands.
10. Consider incorporating your business in order to obtain tax relief on the intangible element your initial franchise fee.
Franchising is an increasingly popular way of starting up or expanding a business and French Duncan are committed to providing clients considering franchising with the best possible business advice. They are an independent Scottish firm of chartered accountants and business advisors with 120 people across 4 offices and the only accountancy firm in Scotland to belong to the British Franchise Association. Their approach is built upon strong & proactive client relationships.
For more information on any accounting, tax or business planning issue in franchising - please call Adam Hardie or Kevin Booth at French Duncan on 0141-221-2984.
