Running a business is hard enough without trying to decode tax myths or second-guess financial advice from TikTok and Facebook groups, or from Dave down at the pub! (Sorry to Dave - second time this month you've got heat from me!)

So this month, we’re clearing things up.

💭 Myth 1: “I’ve reinvested everything into my business - I don’t owe any tax.”

We hear this one a lot, especially from fast-growing startups and service-based businesses reinvesting in staff, equipment, and marketing.

The Truth: Reinvesting doesn’t automatically reduce your tax bill.

Bought a van? Great. If it’s capital, it may not reduce your profits straight away.

Bought a load of stock that you haven’t sold yet, not necessarily gonna save you tax. Paid for a rebrand? Lovely. Not always deductible. Did nothing except work really hard and invoice well? You might still owe tax.

What matters to HMRC is whether the business made a taxable profit, not where that profit went.

What can reduce your tax bill:

• Claiming all allowable expenses
• Using capital allowances
• Making pension contributions or charitable donations

Tip: Even reinvested profits can create tax. Always budget a little for the taxman - he doesn’t do discounts.

💭 Myth 2: “I don’t need software - I just use a spreadsheet.”

Spreadsheets are fine… until they’re not.

Coming from someone who keeps a spreadsheet tracking mine and my wife's gin-rummy scores over the years!

Many small business owners start with Excel or Google Sheets. But as things grow, so does the risk:

• Mistakes from manual entry
• Doesn't talk to your bank
• Forgotten deadlines
• No real-time view of cashflow
• Handle digital record-keeping (hello MTD ITSA…)
• Makes your accountant cry

The Truth: Cloud tools are cheap (some are free), save time, and make you look like the grown-up business owner you are - and we can help you get set up.

Tip: You don’t need to be a tech wizard to use these tools - free trials to see if you’ll get on with these tools are a great way to test them out.

💭 Myth 3: “VAT registration is only for big companies.”

Think VAT is something to worry about later? Think again.

The VAT registration threshold is £90,000 in taxable turnover - but here’s the catch:

• Once you cross this in a 12-month rolling period, registration is mandatory.
• It applies whether you're a sole trader or limited company.
• Anything over £7,500 a month, you probably need to monitor it!

The Truth: You might be closer than you think, especially if you’ve had a strong year, the last thing you want to find out if you should have already been registered and have to either go back to your clients and charge them VAT, or worse, absorb the hit of 20%.

Maybe one of these should be focused completely on VAT, as it’s such a tricky area but for now, don’t get caught out by it. Know your numbers!

Tip: We can help you forecast when you’ll hit the threshold and manage the registration process smoothly.

If you are a sole-trader, there is one of my favourite tax tips ever to help tax plan, which can save you thousands in tax! (Get in touch if you want to know it 😉)

🧠 Final Tip: Setup up your Government Gateway if you haven’t already!

It makes dealing with HMRC and your accountants much easier, and if you want a golden star, get all your taxes that have it, setup on direct debit!

These things take a lot longer than you might think to put together, so please like and subscribe to your favourite business owners favourite newsletter 😉.

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