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The deadline for filing your self-assessment tax return is fast approaching, and it’s a busy time of the year for both self-employed people and their accountants. Whether or not you should hire an accountant to help you prepare your tax return will depend on the business that you run and its financial complexity, but whether you decide to use the help of a professional or do it yourself, everybody who is self-employed should file a tax return. This time of the year can certainly be stressful for the self-employed, so we’ve put together some practical tips to help make filing your tax return easier.
1. Do It Online
Filing your tax return online using the Gov.uk website is definitely the easiest way to get it done. The online system works through all the questions that you need to answer when filing your self-employed tax return and will calculate your tax liability for you rather than you needing to calculate it yourself. It’s typically much easier to use the online tax return system rather than filling out a paper form and posting it, and you get a longer deadline to do it online. Anybody filing their tax return online will have until 31 January, but if you opt to send it in the post, you’ll need to send it by the end of October.
2. Know Your Expenses
You could end up paying more tax than you need to if you don’t list your expenses. There are various expenses that relate specifically to your business that may be claimed as a deduction when you file your tax return. Some claimable expenses include:
- Employee wages
- Fees for an accountant or other business professional who works with you
- Lease payments or money used to purchase machinery or vehicles that you use for your business
- Rent for business premises
- Business utility bills
- Purchase of goods for resale, and more.
If you work from home, you will need to work out the percentage of utilities, broadband, phone use and your car that you use for work rather than personal reasons in order to claim it as an expense.
3. Keep All Documentation
While you’re not required to send in any documents unless specifically asked, you should always keep them. Business owners and accountants that work with business owners must keep all documentation relating to their business for at least six years. Not only does this mean that you have everything ready if you are audited by HMRC, but it will also make it easier for you to fill out and file your self-assessment tax return when everything you need is easily accessible. Keep invoices, receipts, and anything else of importance.
4. Consider Using Accounting Software
One great tool that you can use to make filing your self-assessment tax return easier is accounting software. There are various programs that you can use such as QuickBooks or FreshBooks that are designed for use by the self-employed. You can use these programs from your computer or smartphone for easy access to enter your earnings each day, week or month and keep clear records that you can use when filling out and filing your return. You can also keep track of business expenses.
5. Ask an Accountant for Help
It’s always better to work with a good accountant if you have complicated finances or are filing a self-assessment tax return for the first time and aren’t sure what’s required. Goodman Jones is an accountancy and business consulting firm in London that can help you as you register for self-assessment, fill out and file your tax return. Check out their blog, which has a wealth of information on the process to register for self-assessment, tips to help you save on how much tax you pay, and how to navigate the various tax processes of working as a freelancer or starting your own small business.
6. Give Yourself Time
Finally, you don’t want to be filling out your self-assessment tax return at the end of January and scrambling to meet the deadline. Giving yourself plenty of time to work with will make it easier for you to ensure that you have entered all figures and details correctly. If you want to pay your tax by instalments, the sooner you file your tax return, the better. Ideally, you should give yourself at least a couple of months to start preparing and filling out your tax return in good time. This also gives you time to get together any information that you need such as your Unique Taxpayer Reference, National Insurance number and Government Gateway User ID. Don’t leave yourself rushing to find them at the last minute.
If you are self-employed, it’s almost that time of year again where you need to fill out and send your self-assessment tax return. This can be a stressful time for many self-employed people and small business owners, so keep these tips in mind to ensure that the process runs smoothly for you.
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