Top Tips To Keep On Top Of Your Tax And Accountancy Duties

Business Accounts

Starting your own business is one of the single most ‘gutsy’ things you can do in life. Making a success of your start-up won’t be easy – it will take hard work and dedication but you can bet you will have whilst you are doing it. As a new business owner you will have a million and one things that you need to do, but the one thing you will always need to keep on top of is accountancy.

You never want to miss a deadline with HMRC or you could just find yourself being issued with a penalty – which is exactly why I have produced this quick guide to help you understand what you need to do when it comes to tax and accountancy. If you feel a bit overwhelmed with everything, its natural, and a good accountant will be able to take a weight off your shoulders by managing all of your accountancy needs.

Keeping On Top Of Your Bookkeeping

It is so easy to put bookkeeping to the back of your mind; after all, you probably started your business to leave the world of pencil pushing behind! However, keeping the books in order is of vital importance. If you hire a good accountant it shouldn’t take more than 20 minutes or so each month. They’ll present you with a spreadsheet and all you need to do is enter your income and expenditure. Some accountancy firms use online systems that feed directly to your bank account so most of the legwork is already done for you!

Claiming Entrepreneurs’ Tax Relief

It goes without saying that you never want to pay more tax than you need – so finding a good accountant to help you work in the most tax efficient way possible is a must. Every good businessperson has a sound exit strategy and an accountancy firm can help you develop a plan and groom your business for sale. By doing so you can take full advantage of Entrepreneurs’ Tax Relief.

In a nutshell, Entrepreneurs’ Tax Relief is for entrepreneurs selling their business. It is a lifetime allowance of £10,000,000 where the rate of tax is reduced to 10% as opposed to the standard 20%, meaning that you keep more of the money generated from the sale. As a start-up you may feel like the idea of selling your business isn’t one you are willing to entertain – your business is your baby. However it is always useful to have a way out, and if you make a success of it and a offer comes along that you can’t refuse, you won’t want that hard earned cash being consumed in tax.

Filing Tax Returns

If you are operating as a self-employed sole trader you’ll have to file one tax return each year to notify HMRC of your earnings. However, as a limited company owner you’ll have to submit a personal tax return, a set of company accounts and a VAT return (assuming you are VAT registered), so it’s easy to see how it can be a lot to handle. Each return has its own set of concrete deadlines and if you submit your return late you’ll find yourself being issued with hefty fines that could run into the thousands!

You can have a go at submitting the returns yourself but they are quite complex and it is always recommended that you get an accountant to do it for you. They’ll make sure your returns are submitted on time and without error – meaning you can focus more of your time on the day to day running of your business.

Claiming Expenses

You’ll incur a number of expenses that are for the purposes of running your business and these can be offset against your revenue to reduce your overall tax liability. Keeping it simple, let’s say you are working as a self-employed sole trader. You only pay tax on the profits you make (less any personal allowances). You generate £30,000 of revenue in the year; have £5,000 worth of business expenses and a £10,000 tax-free personal allowance. As a result you only pay income tax on £15,000 of your revenue, which is why it is essential that you claim for all the expenses that you can.

Common expenses include:

  • Rent for business premises
  • Equipment
  • Professional memberships
  • Travel & accommodation

You should now have a clearer idea of what you need to do to keep on top of your tax and accountancy duties. I can’t stress enough the importance of hiring a good accountant – it may seem like an extra expense but the tax savings you could benefit from can far outweigh the monthly fees you will need to pay.

James Timpson

James Timpson is a keen businessman and enjoys all areas of business. He writes regularly about various aspects of business and technology.