5 Tax Myths That Could Be Costing Your Business Money

When it comes to business taxes, misinformation can be costly. Many business owners fall victim to common tax myths, which can lead to unnecessary expenses or missed opportunities for savings. In this article, we’ll break down five common tax myths that could be hurting your bottom line – and what you should do instead.

1. You Don’t Need to Keep Receipts for Small Expenses

Some business owners think small expenses aren’t worth tracking or that HMRC won’t notice them. However, every expense counts. Without receipts, you could miss out on legitimate tax deductions. By keeping accurate records, you ensure you can claim all allowable expenses and stay fully compliant with business tax rules.

2. Paying Yourself in Dividends Is Always the Best Option

Dividends are often seen as a tax-efficient way to take money out of your business. But they’re not always the best choice. In reality, the ideal mix of salary and dividends depends on your income level, National Insurance, tax thresholds, and any changes in government policy. Therefore, it’s important to get professional advice to make sure your business tax strategy works in your favour.

3. All Business Expenses Are Tax Deductible

Another common myth is that everything you spend on your business is tax deductible. That’s not the case. While essential costs like office supplies or business travel are usually deductible, others – like client entertainment – are not. Misunderstanding this can lead to unexpected business tax bills or penalties. So, it’s always worth double-checking what qualifies before you claim.

4. If You Make a Loss, You Don’t Need to File a Tax Return

Even if your business didn’t make a profit, you still need to file a tax return. In fact, reporting a loss can actually help you. You might be able to carry that loss forward or back to reduce tax on profits from other years. So, filing your return – even when things aren’t going well – can still benefit your overall business tax position.

5. Accountants Are Only Needed at Tax Time

Many people think accountants are only useful once a year. However, a good accountant can help you all year round. From tax planning and cash flow to business growth advice, their support can be a game-changer. Regular financial planning not only makes tax season easier but can also reduce your overall business taxes and help your business grow with confidence.

Believing these business tax myths can lead to financial losses, missed deductions, or even penalties. That’s why staying informed and getting professional advice matters. With the right help, you can make smarter decisions, save more money, and avoid costly mistakes.

Need expert advice on your business taxes?
Contact Crossley & Davis today for friendly, expert advice on managing your business taxes the right way.