Let us begin by being honest: getting tax returns ready for the self-employed and small businesses can be stressful.
Planning is crucial, and there are some good tips which are not too late to implement.
You may be preparing your books to send to your accountant or preparing to fill in a self-assessment form yourself. If this is not a priority, it should be. Like death, paying taxes is unavoidable, and failing to pay them in time will only result in financial penalties.
- Let us get deadlines out of the way. Firstly, the self-employed should be registered with HMRC and will have been given the opportunity to submit a paper return from 31 October 2018 or online by 31 January 2019. Failure to meet these targets will result in a fine, although HMRC may allow you to pay that over time. Obviously. you will want to avoid that, so do not miss the deadline.
For limited companies the tax year runs from the 6th April to the 5th April the following year. Note that you may have to file two returns depending on when your company was set up and when it began trading.
2. Whether you are self-employed or run a small limited company or partnership, it is vital to keep accurate records to prepare a sound picture of the business. Using outsourced accounting services means this procedure is made much easier and less stressful. These can be found at websites such as https://www.mushroombiz.co.uk/homepage/services/accounting/. The records you should have include all bank records and credit card receipts (not just statements), invoices, petty cash receipts and any subscription charges which are crucial to your business.
3. The easiest way to record the above is to take advantage of the software available to ensure nothing is lost. Even a simple spreadsheet linked to paper receipts will make the task of preparing your accounts much easier. Also, you will be able to send information to your accountant, if you are using one, online to make their task simpler.
4. A common error on returns involves the payroll. Make sure you differentiate between employees whose PAYE is your responsibility, and for whom you contribute to National Insurance funds, and contractors or consultants.
Remember that HMRC will hold you responsible.