Uh Oh……….It’s Tax Time – Wrong!
Tax time for many self-employed people and business owners is weeks or even days before the money and/or the paperwork is due to be submitted to HMRC. For many UK taxpayers and business owners, this usually happens between November and January every year………….
But it doesn’t have to be this way!
Are you fed up with getting your accounts and annual tax return work carried out in the run up to January?
Do you dread the New Year knowing that your accountant is going to be dropping a tax bill on your desk at often the quietest time of year for your business?
This is the wrong way to look at tax and tax returns – the “Old Skool” way as we like to call it.
Why Worry About My Tax Return Before I Need To?
We all have reasons (excuses) that allow us to leave tax time until the last minute but the truth is a little planning now can save you money next year – and we all like saving money!
Some things you might hear yourself saying as an excuse include:
“I don’t have time”
“There’s other things to worry about”
“The taxman can wait”
“My accountant will take care of it in January as usual”
But who doesn’t want to have more money in their pocket and less paid to the taxman?
Everyone wants to pay their fair share of tax and NIC, but leaving things to the last minute could mean you are paying more than you need to!
OK, so how can I fix this “Old Skool” way of working?
There is a much better way of working when it comes to your annual tax stuff:
- Aim to get your yearly accounts and tax return done straight after your year-end date.
For example, if your accounts to March each year, aim to get these done by end of April, that’s right, the next month! That way you will know how much you need to start saving towards paying the taxman and it gives you 9 months to do so. Much better than a last-minute panic.
- Look at your figures throughout the year and work out how much tax to start saving every month.
That’s how we work with our clients at K Phelan & Company. We use the latest online systems to allow our clients to keep their books updated monthly, weekly, even daily! And we can look at your figures with you at any time during the year to see if you need to sit some money aside for the taxman. Who doesn’t like monthly budgeting rather than an unexpected bill?
So, for example, if your accounting year runs from April 2016 to March 2017, the tax will be due by January 2018. We can look at our client’s figures in September 2016 and project their tax bill, giving them 16 months to save what they owe to HMRC! More time to save, much less worry and hassle, and no big chunk of money going to the taxman in one lump………….
Have your best Tax Year ever and start planning now!
Work in the cloud with K Phelan & Company.
You need to plan for the tax you will owe, you do this by using the knowledge you have at your disposal. Understanding your tax situation before the deadline means you have peace of mind and money in your pocket. Who doesn’t want that?
Here are 5 things you can do to make sure you are planning (and saving) for your tax throughout the year:
- Process your receipts as soon as you get them
Imagine being able to keep all your invoices and receipts for expenses on your phone. Well using the latest cloud apps you can take a quick snap of your receipts and upload them straight into your online books……….no more lost receipts, no expenses missed, no writing these out or typing them up!
- Save As You Go
Working with a cloud accounting firm such as K Phelan & Company means you can predict your tax up to two years ahead. It might not be exact but it’s better than not knowing at all and then bring hit with a surprise bill. Save something each week or month and you can sleep easy knowing you’ve got the funds set aside for your tax payments.
- Plan To Spend Money Sooner
If it looks like you’re going to have a bigger than expected tax bill, then plan to spend and plan money on things your business needs sooner. If you bring forward this spending into an earlier tax year, you’ll get tax relief sooner and this will help smooth out your cash-flow in terms of money needed for the taxman.
- Check Out Special Tax Reliefs
By looking ahead and planning for your taxes, you can also plan much more efficiently for other possible ways of reducing your tax exposure……………..such as pension contributions, tax efficient investments, Research & Development Tax relief for companies……..and more! Some of these reliefs do mean you need to spend a bit more to save a bit more, but that’s the beauty of planning ahead…………you can plan to make sure your business generates enough money to make use of these special tax reliefs.