Jonathan Wingfield, of Ensors Chartered Accountants, with words of advice for self-employed business owners
1. Get into good habits early on
As soon as you start your business, keep accurate, up-to-date records of your income and expenditure as you move through the year. Using accounting software to automate your record keeping can make life much easier – especially when it’s time to complete your Self Assessment tax return.
2. Carry out a monthly reconciliation
Compare your income and expenditure with business bank statements to ensure your records are correct – in other words, that your bank balance as per your records tallies with the actual bank statement. This will ensure any human errors are easily and quickly identified and you can be sure at year-end that all the figures you send to HMRC are correct and complete.
3. Complete your tax return as soon as you can
If you find information is missing, you’ll be able to save the work you’ve done and come back to completing your return online once you’ve collected the information you need. And completing your tax return in good time will also mean you’ll know how much tax you owe early enough.
4. Don’t be late
Submit your Self Assessment tax return before the deadline, which is midnight on 31 January 2018 for online submissions. Any late submissions are likely to result in an immediate £100 penalty and this increases after three months. You’re also liable for interest on outstanding sums, so it’s better to pay your Self Assessment tax bill on time.
5. Claim all expenses to which you’re entitled
These will be ‘offered’ as you move through the form online, but it’s wise to know what expenses you can claim for when you’re self-employed before you start filling in the form, especially if it’s your first time.
6. Avoid mistakes and inaccuracies
Don’t try to claim expenses to which you are not entitled, whether deliberately or not. The penalties for false claims can be severe, as can failure to declare income (which can lead to prosecution). Using up-to-date, accurate records usually ensures the accuracy of your Self Assessment tax return and bill. Take your time when inputting figures and double-check them. If you make a mistake on your return, you normally get 12 months from January 31st after the end of the tax year to correct it (called “an amendment”).
7. Get an accountant to do it for you
I would say that – wouldn’t I? However, an experienced accountant will make sure that things are done correctly, promptly and with far less hassle for you. In addition, they’ll ensure that you claim for everything you’re entitled to claim for, which will help to minimise your tax bill.
• Certified chartered accountant Jonathan Wingfield prepares end-of-year accounts and tax returns for a variety of sole traders, small businesses and limited companies. With offices in London, Suffolk and Cambridgeshire, chartered accountancy firm Ensors uses Sage software.
• Midnight 31 Jan 2018 is the deadline for submitting Self Assessment tax returns online for year ending 5 April 2017, as well as for paying Self Assessment balancing payments for year ended 5 April 2017.