Keep your self assessment simple with these 10 nifty tips:
Set up a separate bank account for business only income, costs and expenses. This will avoid things being missed if paid for through your personal account. It’s a much neater way of doing your accounts
Record transactions in your accounting records as they occur for your out of pocket expenses (items paid for from your own funds and not through the business bank account). For income received and costs paid from your bank account enter the transactions by way of a bank statement load into your accounting records. This will save time on inputting the details
Take a photograph or scanned copy of receipts and invoices. Create a separate folder for them by tax year (e.g. 2017 / 2018), store and keep them backing them up to Cloud storage
Only claim for valid business costs. If in doubt remember that you’ll have to convince a very sceptical HMRC Tax Inspector that it’s a valid business expense
You only need a Profit and Loss Account for your self employed business. You do not have to have a Balance Sheet.
A Profit and Loss account gives a summary of the revenues, costs and expenses incurred during a specific period of time usually a year
The Balance Sheet gives an snapshot, at a point in time, of the assets, liabilities and owners funds for the business
Keep account headings to a minimum e.g. cost and expense headings. Don’t be tempted to over analyse everything. Your time is better spent on other business activities
For self employed businesses with a turnover under an amount equivalent to the VAT registration threshold you only need to complete two boxes on the short self assessment return (SA103S) for your self employment.
Put your income into Box 9 and your costs into Box 20. If filling in the paper form you’ll need to calculate your profit or loss and enter the result in Box 21 if a profit or Box 22 if it’s a loss. If you use software or the HMRC system then the result will be automatically calculated for you.
Make sure that you budget for tax as you go through the year. The GOV.uk web site has a Self-employed ready reckoner for budgeting purpose which can be found at:
Remember that the tax rates change on 6th April each year; so make sure that you are using the right rates for budgeting
If numbers are not your thing or you do not have the time to keep on top of your figures then get help. An Accountant need not cost the earth and will help you to keep on the right side of legal; so money worth spending for peace of mind if nothing else.
Don’t believe web sites that claim that they can reduce your tax bill. Most are Tax Schemes that in the fullness of time will be outlawed by HMRC. If it sounds too good to be true then it usually is!
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