Tax is costing you millions

The cost of something is not just what you pay but what you miss out on, this is called the opportunity cost. Often the opportunity cost is many times the actual cost.

In a previous post I mentioned how a sole trader business making £40,000 could save £3,000 tax by trading as a limited company. Over 20 years this would be worth £60,000 but what is the opportunity cost for a business owner?

Well, the highest rate of return you could get would be developing your business. So, the question is what could you achieve if you used that saving to invest in business development how much could you make?

Perhaps this money could go into Search Engine Optimisation and increase your online enquiries and sales. Maybe you could put it into PR and build your brand and win better and bigger work.

I know that if I put £3,000 into telemarketing I’d win £5,000 of new business. This new business would be with me for at least seven years and I’d get referrals, so for me £3,000 a year saving over 20 years is worth £5,000 x 7 x 2 x 20 = £1,400,000.

What about investing that money taking on new knowledge and skills? It could be that you could build your business and sell it for £5 or even £20m.

If you are not a client of mine you may be thinking it worth having tax planning review? Call me a to book a meeting.