Image courtesy of Ready to Manage
As a business owner, you will be making many decisions about the structure and operation of your business. Dealing with tax matters is one of those critical matters which has to be top of your list. Firstly, the deadlines are imposed by HMRC so there is little or no flexibility about adhering to these deadlines. Secondly, it is a sign of good business management to ensure that your tax matters are in place. To help you with this task, here are a few tips:
1. Prioritise your Tax Return
Even if you’re not close to a deadline right now, DO NOT PROCRASTINATE over your tax return. HMRC received nearly 600,000 tax returns on the day of the deadline (31 January 2018), and many reported that the online system was slow on the day, adding to the pressure. Not only is it incredibly stressful doing it this way, you risk an immediate £100 fine for a late submission.
Set aside a day or two where you focus solely on sorting and submitting your tax return. If you find you are too busy to set aside this time, then procure the service of an accountant, but do it today not tomorrow and definitely before the deadline of (31st January 2019)!
By submitting early – you will know precisely what you owe to HMRC and make better financial plans to pay your taxes.
2. Get everything you need to hand
One of the best ways for making your tax return submission as easy as possible is to get all your financial information to hand so that you are organised. For example, you will need:
- Sales receipts
- Purchase invoices
- Mileage logs
- Rental income and expenses
- Any income from benefits, pensions
- Any other evidence of income and expenses
This information can be compiled digitally using a simple spreadsheet to record your income and expenses for each month and all hard copy paper documents, receipts and bills can be kept the old-fashioned way by printing everything off and organising it into folders.
Keep your records updated and you won’t need to find the extra time to do your sorting and organising as you will already have everything under control. Like most things – ‘practice makes perfect’.
3. Get advice or support from a registered bookkeeper or accountant
If this is not your area of expertise or you do not feel confident completing your returns, consider paying an accountant to prepare your tax return for you. They will be able to advise you and ensure that you are claiming correctly for any reliefs or allowances to which you may be entitled as a business owner. They will also be able to help you comply with HMRC requirements and avoid potential penalties.
The cost of outsourcing is usually far less than what it would cost you in hours to do it yourself. To help you decide, you can calculate your hourly rate of pay for your business and how many hours it would take you to prepare your tax return. If the cost is higher than (or close to) the cost of getting an accountant to do it – this task should be outsourced! Employing a professional to help you with your tax return can save you money while releasing your time to work on other parts of your business!
4. Bonus Benefits
Who doesn’t like a bonus? Sorting out your tax affairs early rather than late, means you don’t have to pay any monies to the tax man upfront. If you owe any tax, provided the amount is less than £3000 and you are in paid employment or get paid as a Director via PAYE, HMRC will try to collect the tax owed through your tax code.
So what are you waiting for………… get cracking!