123 Reg logo Blog

Small Business Tax Tips: Your New Tax Year Resolutions For 2020

By 123 Reg - February 8, 2019

If you are one of the 5.5 million people who fill in a Self Assessment Tax Return, you will be all-too familiar with the ‘joys’ of the January Tax Attack.

It’s the headlong rush to get your tax return filed, so you can beat that all-important January the 31st deadline, and avoid the penalties.

You’d love to get it sorted earlier in the year, of course, but who has the time, right? After all, you’re the one putting the busy in your business.

Well, now you’ve had a while to recover from this year’s Tax Attack, it’s time to set yourself some New Tax Year Resolutions.
If you’ve finally realised that a shoe-box full of receipts under the bed isn’t working for you, here are a few Tax Tips to give you a head-start on 2020’s deadline.

Picture it – no last minute late nights. See yourself sailing through Christmas with the knowledge that your accounts are accounted for.

See it, and make it happen. Make it your 2020 vision!

Tax Tip #1: registering with the HMRC

Whether you’re doing your own books, using an online app, or hiring an Accountant, you’ll still need to:

  • Make sure you’ve registered with HMRC to access online services.

If your business is new, also ensure you’ve registered with HMRC as self-employed and have been issued with a Unique Taxpayer Reference.

Tax Tip #2: outsourcing your accounts

Doing your own accounts is a great way to keep costs down. But time is money and, time spent hitting the books, is time your business isn’t producing. Sounds like you? Then it could be worth weighing up the value of hiring a good Accountant.

Doing so means:

  • You can dump all the information on them, for them to sort out, and you can stop worrying.
  • You can rest safe in the knowledge that your account duties have been fully met.
  • They may be able to make your money work better for your business, reducing your overall tax liability in ways you, as a layperson, wouldn’t think of – and they could even pay for themselves that way, too.

Important Note: Make sure you hire a properly qualified Accountant – ideally a Chartered Accountant. They must have practising certificates and be a member of one of the professional bodies, such as ACCA or ICAEW.

The truth is that anyone can set themselves up in business and call themselves an ‘Accountant’ – yes, even you. Unlike ‘Solicitor’ or ‘Doctor’, for example, ‘Accountant’ isn’t a protected term, so anyone can use it. It pays (literally) to do your due diligence. Search the websites of professional bodies for the names of recommended local firms, or ask around – word of mouth is always a good way to proceed.

Tax Tip #3: taking account of all income

Like many other startups, your business may not be your only job. If this is the case, keep in mind that your other earnings will also contribute to your Tax Return. As such:

  • Keep your P60 or P45 from any other employment you have.
  • Remember you’ll need to know how much bank interest you’ve earned in the year. Yes, you may not pay tax on it, but you still need to tell HMRC about it.
  • Don’t forget, if your business makes a loss (and startup businesses often can), you could actually be eligible for a rebate from your PAYE. Result!

Tax Tip #4: for the record

As a self employed person, you have to wear more hats than the Mad Hatter. One way to hang on to your sanity as you spin all the plates and teacups of a typical business day, is to keep accurate records of all transactions. Do so on an as-you-go basis.

Yes, this will nibble valuable minutes away from each day, but it’ll save hours in the long run. Unless you enjoy sorting an endless mountain of receipts into date order.

Start as you mean to go on and:

  • Keep your records up-to-date as you go: put some time aside. Regular and often means you can get it done much quicker.
  • Have an envelope/folder/box/whatever *per month* and throw in any relevant pieces of paper; then don’t leave it too long before sorting them out.
  • If you can navigate your way around a spreadsheet, then use one to keep your records; set up properly, it’ll do the maths for you!
  • Consider accounting software where you can scan, upload and drop purchase and sales data immediately into a cloud-based receipt bank.

Tax Tip #5: always keep the receipt

The average business person sees more action than a summer blockbuster. Of course, you’re anything but average, so it’s likely you’ll be super busy.

You don’t *have* to have a receipt for everything, provided you keep a careful record. So, make your paper work by:

  • Keeping a diary: make a note of all the meetings and business journeys you take, so you know how much mileage to include in your accounts; write down expenditure that doesn’t come with a receipt such as a taxi fare or a sandwich, etc.
  • Remembering your bank statements and credit card statements are a useful record of your business credits and debits. It’s a detailed list that someone else (someone reliable) has kept for you, so use it.
  • Using a card rather than cash (where possible) as this will automatically generate a record of what you spent and when you spent it.

Make tax less taxing

When it comes to tax, it’s always best to take professional advice first, rather than making a mistake and regretting it later.

HMRC knows it can be scary and complicated sorting out your Self Assessment, so they offer a huge amount of help via their website and over the phone. Talk to the experts!

With the right advice and a few of these common sense Tax Tips in place, hopefully you’ll find your tax is less taxing. Then your January can be less Nightmare After Christmas and more Taxman Returns.