| |
| Top tips for making tax easier |
You may need to have an accountant, but with self assessment [in the UK] there is no reason why you can't do this yourself. Even if you do want to use an accountant - if you keep thorough records then it can save you a fortune in accountancy fees.
These can be done quickly and effortlessly with software programs such as Quicken or Money, but there is a lot to be said for keeping them by hand in a book as well. (Always a good backup if your computer crashes!). As your business
grows you can develop them to suit yourself but to start with you will have 5 columns on a page - date, income details and amount, expenditure details and amount. Be organized and fill these in regularly. For example if you fill this in every
evening it will only take a couple of minutes and it will save you spending a whole week at the end of the year trying to locate and remember everything and getting completely stressed.
Find out what is tax deductible for your business. If in doubt phone up your local tax office and ask. It is what they are there for. It is amazing what you can claim. Put only your tax deductible expenses in your book.
Keep every receipt. This is vital. Get a large envelope or plastic folder for your receipts and label it "Receipts" with the year. Date each receipt with a biro and circle the amount as often the ink on these can fade very quickly leaving you
with a receipt that you have no idea what it is for. Write the amount under expenditure along with what the item is, put it in the folder and forget about it.
If you can claim part of your motor expenses keep a pad and a pen in your glove compartment of your car and write down your mileage for every "business" journey you do whenever you have finished your journey.
It can be very useful to have a separate business account from your personal account. This way all bank charges/loans etc. can be easily separated for your books and it will make it easier to fill in your returns.
Every time that you get any income transfer a percentage to a separate savings account for tax purposes only. That way, when the tax man cometh (and he will) you will have it there and will have earned some interest on it. Depending on
how much you are earning from self-employment 10% is a good starting point and easy to calculate - (You may need to find some more when the tax bill comes in).
- Also read Small Business Accounts Packages in our Small business section.
| Getting really organised - (sent in by an experienced UK-based homeworker) |
- I have been self-employed for 10 years and had felt that I was pretty organised with regards to keeping my accounts and records in order. However I recently had a crises in that my "past-cheque-book-stub" box collapsed and I realised that there wasn't much space left in my filing cabinets for present documents because of all the past contracts and receipts in there.
- Looking around my home office I realised that there were lots of places that were unsafe to delve into because of the carefully boxed back-filed documents that were strategically balancing other useful boxes of STUFF. This may sound fairly banal, but this had led to me having 2 permanently full in-trays which spilled over to quite a large area prior to being filed occasionally into yet more box files. I knew where everything was, and could, given a bit of time lay my hands on anything fairly quickly. However, the crises of my collapsing "past-cheque-book-stub" box led me to a flash of inspiration which, despite sounding a bit trite and incredibly obvious, is something I wish I had known about 10 years ago as it would of saved me a fortune in office furniture.
- Plastic zip lock wallets! I can buy them in my local stationary shop at £2.99 for 5, they are fairly substantial in weight and quality and are A4 size.
- For my tax records I need to keep bank statements, stubs, receipts and contracts. So, now instead of having files and files of old bank statements, I have one box file with 7 zip lock wallets in. Each zip lock wallet holds all my statements stapled together, paying in books and cheque book stubs for that tax year. The idea being that as the new tax year comes around I can throw away the contents of the earliest tax year and refill with the newest. I have everything stored together, have my requisite 7 years worth of tax documents and I have reclaimed some space in my office. I have done the same with my contracts and receipts. Armed with black bin bags and plastic zip lock wallets I have spent a week going into the lost zones of my office and reclaiming space with a vengeance.
- Although some of the stuff that I have chucked away was fairly interesting - (like how much I was being charged by my bank 10 years ago) it was the first time I had looked at it in ten years. Now I am going to have to invest in some more zip lock wallets and make some difficult decisions like - do I really need to keep 50 promo leaflets from an interesting thing I was involved in 5 years ago. That will be tough call but I now feel up to the challenge - either that or I will have to invest in another filing cabinet.
A big thank you to our reader for her contributions
|
