You may not be surprised to hear this, but many companies can fold for the most obvious reasons: tax. When you first begin trading, taxation is not the key issue for you as you are struggling to make a profit as is. While some companies may have the “problem” of having to pay corporation tax within their first year because they make a profit, most start ups fail to see any profits within the first 3 years.
The problem with when you do begin to see a profit is that you need to immediately work out the tax that you now owe. With people who are not good with accounting or have never experienced auditing their own finances for a company, there will be a lot of things you are unaware of. All the way down to what may count as an expense or not, and what you are able to be taxed on.
What you will find is that many of the expenses that you part with during the running of your business reduce the overall tax. Many initial starts up owners believe that they are taxed on all incomings, but this is incorrect. You are taxed on most of the income that didn’t need to specifically be reinvested.
What you should do before you begin to work through your accounts is speak to a registered accountant who will be able to provide you information regarding what is subject to taxation for your specific business. While it may seem like a lot of the income your business brings will be taxable, there are a lot of ways you can avoid the total taxation. Accountants are also useful in finding ways for you to save money, and they will have creative accountancy methods to ensure that your business is not being taxed more than suitable.