4. Utilize company dividends

Many small business owners become too focused on building up their own salary, when they should in fact be more focused on paying themselves less and then topping it up with

Dividends are lump sums, built up from the profits your company has made. Normally, a set amount of dividends will be paid out to shareholders at the end of the year, whilst other profits will be kept back in order to continue to grow the business.

The reason for keeping your salary lower is to avoid paying tax on it. You can then top up your low salary with dividends paid as ‘Directors’ fees’, which will ensure you then also avoid National Minimum Wage regulations too, whilst still earning a good sum overall.

5. Make sure your company structure is right

When you are first setting up your business, you must make sure that you consider all the options thoroughly. Company structure has a huge impact on how much tax you will have to pay.

For instance, so many SMEs still trade as sole traders or as partnerships, when they could actually reduce the amount of tax and National Insurance they have to pay, if they converttheir business to a limited company.