Xero is a great app. But a common question we are asked from our tech savvy clients is “How do I calculate the corporation tax liability using Xero?”
Don’t bury your head with tax
As the saying goes, there are two certainties in life : Death and Taxes. Yet many business owners bury their head in the sand when it comes to corporation tax. Many have no idea how to estimate the amount of tax they have to pay each year, and even worse, fail to put aside the money to pay it. As a result they feel out of control, many start to lose sleep, and some even get into debt with the taxman. (Working with a good accountant will save you this pain!)
The 10 minute tax habit
It doesn’t have to be like this. Our simple three step guide to becoming a Corporation Tax ninja is below.
- Watch the 4 minute video below on how to estimate your corporation tax liability using Xero
- Rinse and repeat this process every three months
- Open a separate business bank account, and transfer funds there every quarter (or every month!) to cover your estimated tax liabilities
This takes away the pain of planning for your corporation tax liability. And, knowing that you have set money aside may even bring a smile to your face when you come to pay the taxman each year!
Using Xero to estimate your Corporation Tax
Unlike other cloud accounting solutions like Freeagent, Xero does not have a function to estimate corporation tax liabilities from the profit and loss reports. In this short video, we explain how to calculate your corporation tax liability using Xero. There are a couple of reports to run, and some quick actions in Excel.
In less than 5 minutes, you can estimate your Corporation Tax liability using excel.