You have a year to get your tax return sorted, so make sure you use it to good effect. Like with most things, leaving it all until the last minute can throw up unexpected surprises that are best avoided.
By logging your receipts and invoices as you go, you can be certain that nothing is missed out. Even if your year is financially slow, it’s very unlikely that you won’t have a multitude of problems to keep you busy, so keeping on top of your record keeping means there is one less task to worry about come January. Hold onto any documents that show income or expenditure and, if you are working with an accountant, make sure they have access to these documents from the very start of the tax year.
Many small businesses choose to keep their books manually because they aren’t handling large sums of money. This is fine if you only turn a small profit and don’t have PAYE or corporation tax to pay. But when you begin dealing with more complicated taxes like these, it helps to have a digital log of everything that comes into and goes out of your account.
A computerised cashbook such as the free VT Cashbook does most of the legwork for you, analysing receipts and payments, in order to keep a cumulative record of all your activity. Keeping your records online makes it easier to access them and change data at any given time. Of course, you can always delegate this job to your accountant.
Tax is a certainty in business. At the end of the year, you know there’s going to be money to pay, so make sure you’ve worked this into your budget. Opening up a separate account for tax payments can help you keep on top of things. By putting 25-30% of your income into this account, you can be sure you have enough to cover your taxes for the year. Just remember to record this money with the rest of your earnings.
When we say all, we mean all. Any expense that is a direct result of your working day can be claimed tax-free. Even trivial tasks such as sending a letter to a client can be considered a business expense. The envelope, stamp and even the cost of travel to the nearest post office are all recompensable. As long as you keep the receipts for these purchases, you should find the HMRC to be perfectly obliging. If you are in any doubt over what you can claim on, then contact an accountant and ask for their advice.