Over the past few months I have made a lot of blog posts giving tips and advice for small businesses. Below are the 3 posts (in no particular order) which have received the most comments. Have a read through them and let me know what you think.

Image: nuttakit / FreeDigitalPhotos.net

• 3 Reasons you shouldn’t put off filing your tax return – Quite a topical one considering the UK Tax Year has just ended
• How much money do I need to start my own business? – Always the most visited post throughout the week
• 5 Social Media Pet Peeves – This is a recent post, but seems to have got people talking

If you’ve read a post on the blog recently that you have liked, please let me know by way of a comment/retweet. Based on the comments/tweets I will be able to tailor more posts to suit your interested

 

If you are registered as self-employed the UK tax year runs from 6th April until the 5th April the following year.

All transactions relating to your business during this time should be collated to form your accounts for that period, and the final figures transferred over onto your self assessment tax return.

The deadline for filing the paper copy of your tax return is the 31st October

The deadline for filing your tax return online is the 31st January.

All tax due must be paid by the 31st January, along with any payments on account that you need to make.

If you need any help with your self assessment tax return please contact me via email or phone – 07833 562 674

In the last couple of years I’ve visited more first time clients and new businesses than ever before, all of  which say ‘I’ve left it too late’. They are of course referring to their business’ accounts.

Whether you are a sole trader, ltd company or massive conglomerate you have to file your accounts and/or tax return by the due date or face the financial penalties for late filing, which could be up to £1,600.

From a sole trader’s standpoint it’s quite easy; the tax year ends on the 5th April and you have until the 31st January the following year to file the return and pay any tax due.

The easiest way to solve this problem is to get your tax return filed ASAP. It doesn’t matter if the return is filed on the 6th April, any tax due doesn’t need to be paid until the 31st January and if you are due a refund you’ll get it back a lot sooner than if you left it until January.

It’s not always as easy as this because small businesses, as the name suggests, are small; quite often being run by only 1 person. If you fall into this category and leave your accounts to the very last minute you could save yourself a lot of time, effort, stress and money by employing a professional to take care of your financial affairs for you.

Outsourcing your accounts/bookkeeping work brings lots of benefits for the business owner:

• Allows you more time to focus on your business.
• Peace of mind that a professional is performing the task.
• Long term it could save you money.
• You can outsource the work as and when needed.
• It can lead to more efficient processes within your business.

One of the main drawbacks is that you will have to put your trust in someone else to complete the task and give them knowledge of how your business works, which is why it is essential that you make sure that you are comfortable working with the person/business. This post gives you some tips on how to make that selection

If you were self-employed in the tax year 2010/2011 time is running out to file your tax return.

The deadline for the paper returns has long since passed (31st October) but you can still file your tax return online, and must do so by the 31st January. If you don’t you will receive a fine which starts at £100 and could rise to as much as £1,600.

If you are already registered for self assessment online, don’t delay it any longer and get the return filed. If you are not set up for on-line filing it may be better to contact a bookkeeper or accountant in your local area to do it for you. A client of mine was recently advised that it could take up to 3 weeks for them to be set up for online filing, which would take you well past deadline day.

 

As the deadline for the self assessment tax reutrn looms ever closer, below are some of my top tips to help keep your business records in order. They may seem simple enough, but if you insist on sorting out your business’ financial records at the last minute these tips will help you keep on top of things.

Just remember that the information you are filing by the 31st January 2012 relates to transactions between 6th April 2010 and 5th April 2011. If you throw everything in a shoebox and expect to remember every detail, what can be up to 21 months later, you may forget some things. Follow these tips to keep on track:

 

 Buy 2 folders and some plastic wallets.

Label one folder ‘Invoices’ for the invoices you raise and the other one ‘Expenses’ for your business receipts. Put 12 plastic wallets in each one (one for each month) and put all the documents for the relevant month into the relevant folder. This helps to keep things in order.

Keep track of when you are paid.

When you have filed your invoices away, make sure to put a mark/stamp on them once you have been paid. That way you will know who to chase up for payments

Set aside time to get everything in order

If you do not want to employ someone to compile your business accounts, make sure that you set aside at least 1 or 2 hours a month to go through everything to make sure you have filed all your receipts and received all payments.

If you have a lot of transactions you may need to do this weekly – either way if it takes a large chuck of time away from running your business you should consider contacting a professional to do it for you. What takes 3 hours of your time may only take 1 hour of their time – can you afford to loose 3 hours pay just to get the books in order?

 

Keep a separate bank account

It’s very easy to think ‘I’ll remember that’ when paying cash into a personal account. To avoid any confusion consider opening a separate account just for your business transactions. Your payments and receipts can then be easily reconciled to your bank statement

Keep notes

If you have a transaction that is a little unusual for your business, make sure you put a note on the relevant paperwork to remind you about it. Things can be easily forgotten, but taking a few seconds to stick a note onto the receipt can save you a lot of head scratching later.

Regualarly check your cash-flow

It’s a great feeling if you are receiving lots of work and are constantly busy, but make sure you have enough money in the bank to pay for the bills. All businesses will have to pay insurances, membership fees to professional bodies, car tax etc… Use your phone, email, PC’s calendar to remind you well in advance so you can make sure that you have the money available to pay the bills

Ask!

If you are unsure about anything, ask someone who can help you. It’s easy to stick your head in the sand, but small problems can soon become big ones if they aren’t sorted quickly.

 

I hope these tips are of help to you, have you got any that you use to keep organised?

A lot of self-employed people will now be filing their tax return. If you’re thinking about putting it off see this post about why not to. A very common question which crops up is ‘What are payments on account?’

This has caused a lot of confusion over the years, so hopefully this post will help to clear up some of that confusion.

Self assesment tax liabilities are based on the tax year which runs from 6th April – 5th Apri, with the tax due to following year by the 31st January. For example, tax due for the tax year 6th April 2010-5th April 2011 is due by 31st January 2012. Generally if you tax liability is greater than £1,000 you will be asked to make payments on account (POA) towards the tax for the next year (2011/12 in this example).

The POA is based on the previous year’s liability with 50% being due by the 31st January and the remainding 50% at the of July. When you come to file your self assesment tax return for 2011/12 any tax due over the POA’s already made will be a balancing payment, due by the 31st January 2013 with another 50% POA

Worked Example:

2011 Liability:                £2,000

2012 1st POA:                £1,000

Due by 31st Jan 2012:  £3,000

2012 2nd POA:              £1,000

 

If the tax liability for 2011/12 is still £2,000 there will be nothing additional to pay by the 31st January 2013 other than the £1,000 POA (50% of £2,000). If the tax liability were to increase to £2,500 for 2011/12 a balancing payment of £500 would need to be made along with a revised POA of £1,250 (£1,750 in total) by the 31st January 2013.

 

However, if your business profits are reducing, or you believe that your tax liability will be less for the next tax year, you can apply to HMRC to reduce your payments on account. It is adviseable to be very careful about taking this action: if your profits do not reduce by as much as anticipated HMRC will charge you interest on any underpayments.

 

 

 

It’s that time of year again when people have to do what they have been putting off for the last 9 months – complete their tax return. Not many people like form filling and paperwork, but unfortunately it is one of those things that must be done if you are self employed. If you are thinking of putting off completing your tax return, please read these 3 reasons why you shouldn’t:

1. If you are self employed you have to submit a tax return online to HMRC by midnight on the 31st January
2. If you miss the deadline the longer you delay submitting the return, the more you’ll have to pay in fines (see below). Even if you don’t have any tax to pay you will still be fined for missing the deadline.
3. If you are also employed, subitting your tax return allows HMRC to make sure that you are on the correct tax code for the following year, which could save you tax.

 

Penalties for Late Filing

 

• 1 Day late = £100
• 3 Months late = £10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
• 6 Months late = £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
• 12 Months late = £300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.

Ignorance is not an excuse

As you can see, failure to submit a tax return on time (even if you don’t have any tax to pay) could result in a fine of up to £1,600.

 

If you are unsure about completing the return, contact somone ASAP who will be able to help you. Paying someone a fee for completing the return on your behalf is surely better than receiving a fine from HMRC…

 

Seems like a daft question, how could you have to pay £1,600 to HMRC if you don’t have any tax to pay?

You may have seen an earlier blog post here: http://rsbookkeeping.wordpress.com/2011/04/08/tax-return-fines-set-to-rise/ when HMRC announced that tax returns are set to rise. The simple fact is that even if you don’t owe any tax at all to HMRC, you could still end up being fined £1,600 for not submitting the return on time. In the past it was possible to cancel the late return penalties if there wasn’t any tax due, but not anymore.

The £1,600 fine is worked out as below:

• £100 penalty for late filing
• After 3 months late £10 per day up to 90 days, then
• After 6 months late the greater of £300 or 5% of the tax due
• After 12 months late the greater of £300 or 5% of the tax due

Seems silly that you may needlessly have to pay some tax. If you are unsure how to complete your tax return surely it is better to spend a relatively small fee to have someone do it for you and avoid these fines? If you are capable of completing it yourself, then there is no excuse. It won’t take you long to do and will save you money in the long run.