As the financial year has now ended, you are able to submit your tax returns online. Paper copies need to be submitted by October whereas if you are doing it online you will have until January 2023 to file your return. If you have paid tax and think you may be due a rebate, then you may wish to get your tax return filed as soon as possible in order to enable you to claim the money back.
Doing your tax return yourself may mean you are able to save a bit of money on accountancy fees but you do need to ensure that you know what you are doing and do it correctly. Mistakes could be very costly and even mean you end up in trouble with HMRC.
If your business is very straight forward and you have the same incomings and outgoings pretty much every month then you may decide to do it yourself. If however your business is a little more complex then you should seriously consider using an accountant. A good accountant can often give you advise and discuss things you can claim for that you were not aware of. They often can pay for themselves in the money they can save you in tax.
When many people set up their own self-employed business, they may start off by doing their own books. Often when you are first starting out; it is relatively easy to keep on top of everything and you make sure that you do everything right. As you get busier, it is easier to forget and lose track of what you need to do and very quickly you can find yourself in a bit of a mess.
You need to have processes in place to help you manage your accounting. If you have receipts lying around everywhere and do not have places to keep things then you will quickly discover that doing your tax return is a nightmare. Some people do hardly any accounting work throughout the whole year and then instead do it all in one go when it comes to April. This can make it a massive task and you may find that you miss things because you are trying to go back almost 12 months.
If you do not think you can manage your accounts or do not have the knowledge and experience then it really does pay to hire an accountant or and accountancy firm. Often the money they can save you through their advice on tax and how to manage your finances, pays for their time.
When looking for an accountant or an accountancy firm, it is important to find one that you can trust. If you decide to go with a firm you may be allocated a specific person who handles your accounts. This can be handy as if you have any questions later on down the line they will already be familiar with your business so they can advise you easily.
If you do decide you want to continue handling your accounts yourself then you should try and set up your files and folders to make the job easier. Ideally you should update your records on a weekly or monthly basis so that it is not left too long. HMRC are going to be asking self employed people to update their accounts on a monthly or quarterly basis very soon so it is important to get in to the habit of doing this now. Having spreadsheets set up on your tablet or laptop where you can quickly record expenses in an evening will help you manage your business records effectively. There are also some great software packages out there that make accounting easy.
This year has been a very strange one for many businesses and has financially hit a lot of people hard. The government has been giving out loans, grants and tax reliefs to many who have been negatively impacted by the pandemic. Many self employed people, who qualified, were given a number of grants based on their previous earnings to live off. These grants where to top up the wages of those that have been out of work or who have suffered a loss in revenue due to the lockdowns and therefore being unable to work as much as they normally would.
It is important that anyone who is self employed ensures that they keep all of their financial records up to date and holds on to any evidence they may require at a later date. IT may be that HMRC start to carry out audits and spot checks on self employed people to find out if they have claimed what they should of and if they owe any extra in tax. With the country in a bit of a financial crisis, they are likely to want to reap back in as much money as they can.
If you are self employed as a sole trader you will need to fill in an annual tax return each year and submit it to HMRC showing any earnings you have received and any expenditure that you can claim for. By law you need to keep these records for five years from the latest date of sending back your tax return.
Many small businesses use cash basis accounting and record income and expenses when they receive money or pay a bill. It is the most straightforward way to record transactions. It is important to keep proof of income and expenses even though you do not need to send these to HMRC when completing a tax return.
The important records that should be kept are evidence of all sales and income, all business expenses and records of any personal income such as pensions and other employment. If you use a vehicle for your work, receipts for fuel and other vehicle expenses should be kept as this will be part of your expenses. It is a good idea to keep a record of the mileage of the vehicle as sometimes it is better to claim mileage costs rather than the actual costs of fuel etc.
If you are considering going in to bookkeeping then you need to fully understand what is going to be expected of you and what your main day to day job is. Bookkeeping is a method of recording financial transactions that are used by a business on a day to day basis. These transactions can include purchases, receipts, sales and payments that are made by a certain individual or an association. It is very important that this is done with the upmost care and attention as a simple mistake such as missing off a zero, could get the business in a lot of trouble. Often a bookkeeper liaises with an accountant or an accounts department who will usually collate all the information into the relevant accounting systems or spreadsheets.
Some bookkeepers still prefer to use pen and paper for all their workings out and record keeping whereas others will use computer system such as Sage or Xero. Lots of companies are moving towards electronic record keeping as there are many advantages such as less likely to make a mistake, multiple copies can be made instantly, data can be accessed remotely and handwriting does not cause issues when someone else needs to read the information.
Being self-employed can have many benefits such as working the hours that suit you, not having to answer to an employer and taking holidays to fit in with the family however most people in this position would have to admit that one of the disadvantages is the bookkeeping and filing of tax returns.
Employing an accountant is a wise choice as they can often reduce your tax bill by claiming for everything that you are entitled to claim for, but the month by month bookkeeping is usually completed by the self-employed person or their secretary.
The accounts need not be over-complicated, and a series of spreadsheets are usually sufficient. The first spreadsheet ought to show income with a record of the date the invoice was given to the client, invoice number and amount. A further column will show the date the invoice was paid and the method of payment.
The second spreadsheet will show expenditure. This will include columns showing the date, amount paid, method of payment and recipient. A further spreadsheet or an area on the expenditure sheet can be used for vehicle expenses.
It is wise to bring these sheets up to date on a monthly basis as it is more manageable overall.
The job of a bookkeeper requires a certain set of skills and as you gain experience you will find a number of other opportunities may arise.
There is no legal requirement to have a certain qualification to be a bookkeeper, but if you are looking for employment in this area you will often find that you are more likely to be accepted for a job if you do. Most people start off by doing a bookkeepers or accountancy course at college. You will usually need to have 2 or more GCSEs at grades 9 to 3 (A* to D) for a level 2 course.
You can train yourself to become a bookkeeper or learn whilst on the job, which will allow you to keep study costs down and work at the same time but if you are planning of becoming self-employed then it is important that you ensure you know exactly what you are doing before offering your services to clients. You may have some family members who are self-employed and you may start off by doing their books for them. This will also give you experience that you to add to your CV to make you a more viable candidate when it comes to applying for jobs.
Financial data is an essential element of any business. It is necessary to maintain financial data to enhance the growth of your business. As a business person, it is advisable to hire someone who will do the work for you flawlessly. Look for best bookkeeping Northampton services to let everything flow well with your business. Read More