With the tax self-assessment deadline quickly approaching, it’s time for the 5 million self-employed workers to get organised. If you’re one of them, you might be unsure of where to start? Daniel Dinay, Senior Marketing Manager at Intuit QuickBooks, offers his top tips on what you can do to get your affairs in order before January 31st.
Start Up Loans (SUL): What happens if you’re not ready to submit your self-assessment by the 31st?
Daniel Dinay: If you don’t submit your taxes by the 31st deadline, you could get hit with £100 penalty. This is what you’ll have to pay back if you haven’t submitted within three months; after that time, the penalty increases substantially.
If you’re not ready in the next few days, you’re going to spend a lot of time trawling through the last 12 months of receipts and statements as you attempt to piece together just how much you’ve spent on your business. In addition, if you’re rushing, you might miss cash transactions that you forgot you incurred. This leads to an incorrect tax filing which leaves you paying more.
SUL: What can you do if you only have a few days to get everything ready?
Daniel Dinay: If you wait until the last few days to get your taxes in order, like a lot of self employed workers do, the quickest thing you can do is find an accountant; companies like Tax Assist are on hand to help you with this and are very efficient. Be warned – accountants will charge you between £200 and £400 just for a self-assessment for the tax return.
If you have a little more time, you could use tax specific software, such as QuickBooks Self Employed, or the HMRC Self-Assessment tool, which is free to use.
SUL: How do I separate my business from personal expenses?
Daniel Dinay: In order to this, you’ll need to learn what can be expensed to your business to what can’t be. For example, a lot of self employed individuals don’t realise that they can expense their home office, clothes or other suppliers directly related to their business. Something like petrol to put in your car to go to a meeting 50 miles away fits this criteria.
Secondly, keep it simple by opening a business account and having a credit or debit card that you only use for business expenses, creating a clear divide between the two.
Finally, QuickBooks Self Employed can help you easily categorise and separate your expenses.
SUL: Once I’ve done this, what are the next steps?
Daniel Dinay: You’ll need to go to the HMRC website and fill out a Self-Assessment for free. Having a tool which sorts out personal and business expenses and allows you to get organised throughout the year is the best approach to take, so it’s not a mad rush at the end of the tax year.