Ask any business owner what they dread the most about January, and chances are it’s not the weather; it’s the self assessment deadline. The brown envelopes, the deadlines, the endless forms, where one wrong ticked box feels like it’s setting off alarm bells that’ll land you in court for tax evasion. It’s a stressful period and one which most small business owners know all too well.
Running your own business is hard enough, but tax season has a way of making even the most organised people feel like they forgot to revise for a test and all their notes are written in a foreign language. The truth is, one wrong mistake can cost you thousands, either because you’re paying too much tax or you’ve made a mistake and didn’t pay the right amount.
But what exactly are the mistakes?
Leaving Everything Till The Last Minute
It sounds harmless enough, but leaving your self-assessment until 11.50 pm on January 31st can land you in heaps of trouble. Because even the slightest mistakes lead to snowballing errors and oversights in your rush and panic to file on time, and avoid a fine. And despite promising yourself you’ll do better next year, you probably won’t.
Mixing Business with Personal
It sounds harmless enough, but if you use your personal phone for work calls, you can buy a laptop on which you can watch Netflix on. However, when tax time rolls around, how do you separate business from pleasure? Overclaim and HMRC might make you pay penalties. This is where keeping everything separate is vital. You need to be strict with using your business funds and equipment for work purposes only and vice versa for personal use. Despite how hard it might be, it will be easier come tax time.
Not Appreciating the Value of Accountants
It might seem like an accountant is just another expense; however, when it comes to paying taxes, it can be a worthy investment and essential if you want to make sure you get things right. Complications like payroll, expense deduction or figuring out what household bills you can and can’t claim can be made easier with expert advice. Working with tax accountants means you don’t need to put yourself through the stress of filing your return with only half the information. Accountants can check your finances and help you prepare for submitting your self-assessments so you’re avoiding those scary brown envelopes and potential penalties.
Not Knowing All The Dates
The 31st of January isn’t the only date you need to know. You need to know the first day of the new tax year (6th April) and when you need to make your pre-payment on next year’s tax if applicable (31st July). Miss one, and HMRC won’t forget, and they expect you to remember too. Even if it’s a genuine mistake, it can be enough worry to tip you over the edge. So know the dates, know what you need to do at each date, and get it worked out.
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