Considering that 500,000 new businesses were founded in the UK in 2013, for many business owners 31st January 2014 will be the first time they have filed a self-assessment. It should be an exciting opportunity to reflect on the first year?s successes but the process can become an unnecessary, and costly, headache. By following a few simple pieces of advice, business owners and sole traders can concentrate on running their companies rather than worrying about the taxman: 1. Record keeping ? working throughout the year The secret to tax returns is preparation. The best way to prepare is to keep diligent records throughout the financial year. Keep a track of all your expenses ? office costs, phone bills, stationery and repair call outs linked to your business can all be claimed back. If you tend to lose receipts, then get into the habit of taking photos of them and emailing them to yourself or saving them online using software. Keeping everything in one place will save you time in the long run. 2. Make time, do it at home Getting your tax return right is important. Even a minor error can distort your figures and incur a fine from HMRC. Ensure you have a quiet space to dedicate uninterrupted time to your tax submission. Get all of your papers together and set aside a couple of hours. 3. Know your UTR The UTR is the Unique Taxpayer Reference given to you when you register with HMRC and it is required to submit your taxes online. However, if you lose your UTR, HMRC cannot give you a new number over the phone, so you will have to wait for a postal delivery. If you realise you have misplaced your UTR make sure you apply to HMRC for a replacement at the earliest possible opportunity. 4. Understand the financial year Get your dates right. Remember to include all income earned by your business between 6th April 2012 and 5th April 2013. Don?t forget you have to include all income earned within the tax year and not when you were paid. If you sent out your invoice in the current tax year but didn?t get paid until after the deadline, it still counts. 5. Self ? employed pages. Remember to only include the income generated directly by your business when filing on the self-employed pages of your return. The HMRC are not interested in any other income such as personal investment, rental income or other jobs when filling in the self-employed pages. Take the time to differentiate everything that is a direct result of your business and do not blur those boundaries. Find out more about?working for someone on a self employed basis6. VAT Separating VAT from your income is a relatively simple sum. However, people tend to use Excel for their record keeping and they forget to remove VAT. This is a really common problem and it is exactly the sort of mistake that can lead to a fine from HMRC. Double-check or use software which will account for your VAT correctly and automatically. 7. Check with an accountant Use your accountant as much as possible when filing your tax return. They are the experts, so make the most of their knowledge and experience. Ensuring the financial health of your company is your number one priority, and an accountant should recognise that. Speak to them, share your documents with them and follow their advice to the letter. 8. Avoiding fines Ultimately, the reason for all this hard work is to avoid fines. These are the fines you can expect to receive if you are late with your tax return: ?100 fixed penalty if you are one day late PLUS, ?10 a day for each subsequent day you are late, to a maximum of ?900 PLUS, ?300 or 5% of the tax due if you are more than six months late Missing the tax submission deadline is simply not worth the hundreds of pounds it could cost you. By taking your time, staying organised and using the resources available to you, you can file your taxes in ten minutes and concentrate on the more important task of looking forward to another lucrative year. 9. Pay! This may sound like the most obvious point of all, but don?t forget to actually pay your tax return! Small business owners, especially if they?re doing this for the first time, will have read a lot about what they need to do to avoid fines and get their tax return in on time, but they must remember to actually pay by the 31st January. Some can pay their bill directly to HMRC online and they recommend that you do this if eligible. If you aren?t eligible to pay online, you can pay by cheque, cash or debit card at the Post Office. Click here to check whether you can pay directly. Bobby Chadha is an accountant at IntuitImage source
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.