Don't panic! Self-employed and getting organised to submit your tax return?
If you are self employed, you may already have thoughts about how to spend some of your precious festive holiday thinking about your self-assessment tax return. Although there are a couple of months left until the self assessment deadline on the 31st Jan, you might have a huge pile of muddled receipts, paperwork and invoices or agents’ statements.
The problem is, you know that you will likely end up in exactly the same position next year. Unless you change the way you approach your financial and tax affairs. End the worrying and stressing over your return and scrabbling to submit to pay your tax at the last minute!
Here are three simple steps to help you change both your mindset and your habits and lead you along the path to self-assessment enlightenment! Here we go:
Step 1: Don’t leave it until the last minute
Sounds like an unhelpful case of stating the obvious, right? But it is actually the fundamental starting point for banishing your tax woes. Just remember: January the 31st is the absolute last chance saloon! Human nature means that we tend to leave the horrible or boring stuff until we can’t leave it any longer and it would be fair to say that self-assessment, is both horrible and boring for the majority of people. By leaving it until the last minute, not only do you have Christmas and New Year to contend with (a stressful time of year), it is also a busy time for the new work year. So why add another big source of stress into the mix?
Step 2: Get up to date
Between the 31st of Jan 2020 and the 5th April 2020 you have two solid months to catch up and get everything straight. Let’s do this! We’re not talking about filling out your self-assessment yet. Just start by pulling together the receipts you have strewn around the house, car and everywhere in between, alongside your income records (payslips for employed work, invoices you’ve sent for self employed work, etc). This is something you end up doing at some point anyway - let’s get it out of the way now!
If you set yourself a goal of getting all your income and expenses up to date by the end of February, you can move to the next step.
Step 3: Record as you go
It’s the 1st of March and let’s assume you’ve managed to get yourself up to date (well done!). You’ve actually done the hardest part now and it’s time to focus on keeping up to date - and that means recording as you go.
There are many, many benefits of recording your income and expenses as you go. It’s a fact that 4 out of 5 self-employed people don’t claim all the expenses they are entitled to. The two main reasons for this are lost or damaged receipts and not knowing what you can claim for. There are many tools out there to help, from 1Tap Tax, FreeAgent or Quickbooks (desktop and mobile apps to help you categories and report on your income and expenses) to 1Tap, and app which allows you to photograph your receipts so that you not only guard against losing them, but they are also automatically categorised for you in the 9 recognised HMRC categories.
The real trick is to get into the habit of recording as you go. It might be a bit alien at first, but once you get into that habit it becomes second nature. It’ll also set you up for the changes to the tax system in the next few years - when everyone will be completing quarterly returns for HMRC (see Making Tax Digital for more info).
If these strategies don’t work for you, I am always here to sort and record receipts and income for you. Depending on the size and nature of your business I can have all your information catalogued and organised in time for you to submit yourself or pass to your accountant. For competitive rates, contact me at email@example.com.