Tax season is one of the most nerve-wracking times of the year. From putting together all of the necessary tax documents to finding the right accountant, taxes can be time-consuming, frustrating, and a major challenge. Add in a home-based business and taxes can be downright overwhelming. However, there are some things you can do to make your tax season a breeze.

One of the most important decisions you’ll make as a business owner is who you will choose to help you with your bookkeeping and accounting needs. Research accountants in your area and look for one that specializes in small business taxes. Ask if they will prepare both corporate and personal returns if needed. Make sure your accountant is clear on how they charge for their time – especially for questions over the phone.

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The best way, of course, is to take the middle road and follow a tax plan right from the start but keep it flexible enough to deal with changes or growth along the way. This can get very tricky, especially in the UK, where there are complicated and inter-related issues to be dealt with. This includes the myriad of HMRC regulations regarding VAT, PAYE schemes, capital gains, etc. When starting a business, the type of structure that maximizes tax efficiency depends on what the owner or partners expect from the business, and how much time, money and effort can be invested into the accounting side of the business. For instance, sole traders and simple partnerships will find it’s very easy to maintain the records. But the profit is taxed as personal income, and the sole trader or partners are liable for debts.

Limited liability partnerships and limited liability companies have increasingly more paperwork, and more accounting, registration and reporting requirements. Principals are less exposed to risk, and profits and earnings come in more than one form. The company has to pay taxes in the form of corporation tax on earnings, and the shareholders face capital gains tax and income tax on dividends. The point here is that it is hard to deal with all this unless there is some sort of tax plan in place. The company has to be structured in a way that matches this tax plan and the goals of the business. Of course, there are still a whole bucketload of issues to deal with for established businesses.

As for payrolls and benefits, it is important to come up with the most efficient way to handle pension schemes, share allotments to employees, etc. But mixing up all this with a PAYE (pay as you earn) scheme that deducts tax and NI contributions can also be a tricky and dangerous matter for the employer. For instance, there is the possibility of liabilities piling up over time and suddenly hitting home with penalties in a PAYE inspection. One of the most complex and frustrating aspects of business tax planning is dealing with VAT (Value Added Tax). The headache starts with VAT registration, and then trying to minimize VAT on sales and maximize VAT recovery on purchases. The rules constantly change, and it is important to have someone keeping on eye on all things VAT to make sure there are no compliance failures.