SMEs 'wasting money'

Many businesses are finding that their finances are still very tight but research suggests that more could be done to ease the situation.

Buying a business, especially a struggling company or one that has fallen into administration, often involves turning around the trading situation. With this in mind, recent research from unbiased.co.uk may be of interest to buyers.

The study found that SMEs could be wasting as much as £4.2 billion in unnecessary National Insurance payment on their profits, simply by not considering changing their business model to that of an incorporated business.

The overall tax wastage identified in the research stood at £7.1 billion for SMEs in the UK, but this included businesses that fail to make use of tax breaks and tax efficiency.

Karen Barrett, chief executive of unbiased.co.uk, commented: “Tax is a vast and complex subject and business owners often simply do not have the time to understand how to optimise their tax status whilst also running their business day to day.

“Our Small Business Tax Action Report reveals that by not considering incorporation, small businesses could be missing out on huge national insurance savings. Whilst this option will not suit all businesses, it can be an effective way to save money and it's well worth considering by businesses that meet the criteria.”

It is well worth taking the time to consider different ways of organising a business, particularly when you first take on a struggling company.