Get an accounting system
Being organised is absolutely vital for good record keeping, particularly for businesses over the VAT registration threshold and the new rules under Making Tax Digital from April. There are many excellent online accounting systems available these days at a budget to suit your pocket. Once set up, a good online accounting system will allow you to stream line your bookkeeping and save you time in your record keeping each month.
Budget for your tax bill
To prevent a big surprise at the end of the year make sure that you budget for your tax bill as you go throughout the year. If you are self employed then a good rule of thumb is to save about 35% of your profit for the tax man. This should be enough to cover your income tax and national insurance bill. Of course, your accountant should be able to provide a tailored tax budget for you.
Keep all of your receipts
You might be surprised how much even the small amounts spent on your business soon mount up. Make sure that you keep all of the receipts for things such as postage and stationery as well as claiming the business proportion of costs such as your phone bill and internet package.
Review your business structure
From time-to-time it is worth reviewing your business structure to ensure that it is the most tax efficient set up for your circumstances. At certain levels of profit there are significant tax savings to be had if you move from a self employed sole trader to a limited company. However, following tax changes in the last couple of years, there are also levels of profit at which it is wise to revert to sole trader status rather than continue with the company.
Get an accountant!
I would say this, wouldn’t I?! Getting an accountant is a great way to keep on top of your finances. You will be reminded of important tax dates and payments due, shown ways of keeping your accounts in order, and advised on allowable expenses and how to report them so you are as tax efficient as possible. An accountant will help you with things like estimating how much tax and national insurance you will need to pay every six months, or quarterly for VAT, but also help you plan one-off transactions and the tax due thereon, if any.
Make friends with your accountant!
We are friendly really; some of us even have a sense of humour! Most importantly, we are here to help and there is never a question too silly to ask.