If you are here because you missed out on the end of the tax year 2016, then do not worry. It creeps up on us each year, leaving you unaware and unprepared. We recommend that for next year, prepare to ensure you don’t miss out. The biggest mistake most businesses make, is leaving it to the last minute. As a result, we aim to show how to avoid problems with a few helpful tips.
If you are a sole partner business owner or a partner in a partnership, then you are treated as self-employed by the taxman. As such, you should fill in a self-assessment tax return for that year. The deadlines for these forms are October 31st for paper copies and January 31st for online copies.
Organise bank statements and accounting records in neat folders or files. Round up your outstanding sales and purchase invoices and include them in your books and records. If you hold stock, ensure that at one point in the year a stock take is performed.
Ensure paperwork from your bank is organised and ordered. Collect statements from suppliers, bank and credit card statements from financial institutions as well as invoices and records received from clients. Divide your receipts and invoices into ‘incoming’ and ‘outgoing’ folders to keep it simple.
HMRC defines an expense as something that is “wholly and exclusively for business use.” Each pound spent annually on your business is deducted against corporation tax so make sure you have claimed for every expense, even if it appears trivial. Get your deductions in early to ensure large returns. Dedicate an hour a month to collect receipts and file them away.
If you earn 82k or less, then you can complete the self-assessment tax return through cash basis accounting. The process will be easier if incoming and outgoing expenses are filed as these payments need to be accounted.
If you are VAT registered; fill in your VAT return forms as well as passing your books over to your accountant. They will inform you if you have filled it incorrectly. By getting this information prepared, it gives you scope to get it wrong and still fill the form correctly with enough time to spare.
Stay up to date with the modern world with apps and services available to take the burden out of the end of the tax year. Software such as EnableSoft, an automation software company, that looks at your current set up and lets you know what needs to be optimised ready for April. This software can save you time and money better spent on growing your business.
The end of tax year rush doesn’t have to be so… well rushed. Organisation and preparation are the keys to success come April. Using simple tools such as excel spreadsheets and folders are a start. By taking one or two hours a month to organise your receipts and statements, businesses can save themselves a financial headache come March/April.