Financial planning
Tax planning for business owners
Tax planning is about structure and timing considered in advance, within the law. It is not about finding tricks in March. We work alongside your chartered accountant, not in place of them.
What is tax planning?
Tax planning is arranging your financial affairs — the structure of the business, the timing of income and expenditure, and the instruments you hold — with the objective of improving tax efficiency within applicable law. It is legitimate and forward-looking, and it is distinct from tax evasion, which is illegal, and from last-minute purchases made only for a deduction.
The questions worth asking early
- Is the constitution of the business still the right one? A proprietorship, partnership, LLP and company are taxed differently, and the right answer changes as a business grows.
- How is the owner taking money out? Salary, remuneration, interest on capital, dividend and drawings have different consequences depending on the structure.
- Is the timing of income and expenditure deliberate? When something falls across a year end can matter as much as what it is.
- Are legitimate business expenses actually being claimed? Many owner-run businesses under-claim simply because records are not kept.
- Are compliance deadlines being met? Interest and penalties are the most avoidable tax cost there is.
- Are personal and business finances properly separated? Mixed accounts create both tax and credit problems, and both are expensive.
Where tax and borrowing meet
Two connections come up constantly. First, filed returns are the evidence a lender uses: an aggressively minimised taxable income reduces the loan you can raise, sometimes by more than the tax saved. Second, interest on borrowing used for business purposes is generally treated as a business expense — which changes the real cost of a loan and is worth confirming with your tax adviser before choosing a structure.
This trade-off deserves to be a deliberate decision rather than an accident. If you expect to raise funding in the next two years, it is worth discussing what your returns need to show — see business loan eligibility.
How Cavaris Capital helps
- Framing the questions that should be put to your chartered accountant, and making sure they are asked in time.
- Considering how structure, remuneration and timing decisions interact with borrowing and investment plans.
- Reviewing whether the instruments you hold are appropriate for your objectives rather than bought for a deduction.
- Keeping the compliance calendar visible, so avoidable interest and penalties do not accumulate.
Questions people ask
Frequently asked questions
What is tax planning?
Tax planning is arranging your affairs — business structure, timing of income and expenditure, and the instruments you hold — to improve tax efficiency within applicable law. It is forward-looking and legitimate, and it is different from tax evasion, which is illegal.
Does minimising taxable income affect my ability to get a loan?
It can, significantly. Lenders assess income from filed returns, so a return that shows very little income supports a smaller loan. Where funding is likely in the next couple of years, the trade-off between tax saved and borrowing capacity lost should be a deliberate decision.
Is interest on a business loan tax deductible?
Interest on borrowing used for business purposes is generally treated as a business expense, which affects the real cost of the loan. The treatment depends on how the funds are actually used and on your circumstances, so confirm the position with your tax adviser.
Does Cavaris Capital file tax returns?
No. We are not a tax practice. We help frame the planning questions and consider how tax decisions interact with borrowing and investment, and work alongside your chartered accountant or tax adviser, who handle advice and filing.
Talk through your funding requirement
Tell us what the money is for, how much you need and by when. We will tell you which route fits, what the file needs to contain, and what is realistic — before you apply anywhere.