As we head into March, we’re getting ever closer to the end of another financial year.
That means freelancers and self-employed workers will all be thinking about their next small business tax return. The question is however, are you up to speed with the latest rules and regulations?
More to the point, do you know everything you need to know to make filing your self-employed tax return a thing of pleasure instead of pain? No? Then check out these hints and tips that we hope will make filing your next tax return a whole lot easier.
Keep Your Accounts Organised
It’s always a good idea to go through your accounts before you begin filing. If you’ve been good all year and have kept things organised then you’re one of the lucky ones. If not, we suggest spending time going through things and organising them all. Then remember to do so moving forward. It takes seconds out of your day and makes a huge difference when it comes to actually doing your taxes.
You should also make sure you know whether your accounts are organised using a cash basis or an accruals basis. Cash basis is most commonly used by small businesses with a turnover of £150,000 or less.
Always Include Expenses
Recent studies have shown a staggering number of people aren’t sure what expenses they can and cannot claim for.
This means a huge amount of people are paying more tax than they need to be. As a self employed person, it’s good to remember that you’ll be paying self employed tax on your profits, not your income as whole.
It’s also worth looking into your ability to claim expenses for heating, rent, any cleaning services you employ and even training for staff, business trips etc.
If you work from home then you can also claim a percentage of your heating bills, electricity and lighting however this will all depend on how much you actually use for work.
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Get Your Tax Allowance Right
When it comes to working out how much tax you owe, you need to make sure you get your tax allowance right.
For instance, when completing your 2019-2020 taxes, you’ll need to make sure you have the current tax allowances to hand that could apply to your current income.
In 2019-20, the basic personal allowance will be going up to £12,500 from £11,850 2018-19.
Think About Registering For VAT
While you aren’t legally required to register for VAT until you begin turning over more than £85,000, you are given the choice to do so if you’d like.
Being registered for VAT means you can charge VAT at 20% on your services and products. It also means you can claim it back when you buy things for your business. This is worthwhile if you’re paying a lot in VAT on items specifically for your business.
Prepare To Pay For Next Year
If you owe £1000 or more in tax, you will have to pay a tax bill contributing to an estimated figure for the following years taxes too.
This will be done in two instalments which will need to be paid by July 31st and January 31st. While it’s there to help make payments more manageable, it can become problematic in your first year.
Contact The Professionals
For most, it makes perfect sense to have a professional accountant take care of tax returns on your behalf.
Not only will they know everything there is to know about what you can claim, what you can’t claim and what you’re eligible for, but they’ll give you the freedom to focus on what’s important – growing your business.
We recommend giving Salient Accounting And Finance a call today on 01268 833 828.
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— Will Corry (@slievemore) January 13, 2020