don’t do a Jeremy Corbyn tackle your small business tax return now
Many of the UK’s top politicians have been rushing over each other to release their tax returns in recent weeks. But in addition to revealing Boris Johnson’s impressive self-employment income and David Cameron’s expenses, these documents have also highlighted another important piece of information Labour leader Jeremy Corbyn was fined 100 for filing his most recent tax return late.
The leader of the opposition isnt alone: HMRC estimates that around a million people fail to file their self-assessment before the 31 January deadline passes every year. So are there any steps that Corbyn and the other people who received a penalty do to avoid making the same mistake next time?
Your tax return is for the tax year ending 6 April 2016, which at this point is only just a few weeks ago. That means the information you need to include in it should still be relatively fresh in your mind, and you’ve not got a looming deadline to worry about or rush towards.
However, the longer you leave it to file your tax return, the more likely it is that you will forget to include something such as interest on a particular bank account or enter incorrect figures, especially if you’re frantically trying to pull everything together before the 31 January deadline arrives.
Remember that you can also re-submit your tax return for no additional charge if you discover errors in the future so if you file now, you can still do a final double-check well before the deadline, and still have time to make any final amends. And filing early is also potentially good news from a tax point of view, because if your tax and class 4 NI liability for 2015/16 is less than your liability for 2014/15 was, then you may be able to reduce your 31st July 2016 payment on account. Also, if you’re due money back from HMRC, the sooner you file your tax return, the sooner they will repay that to you.
Find an accountant
There are lots of potential pitfalls that you may not be aware of when it comes to self-assessment. So unless your business is the very simplest and smallest of sole trades, and you have no other income such as income from a job or property or unless you are 100 per cent confident of preparing your tax return correctly yourself it is a good idea to ask an accountant to help you prepare or check your tax return.
This is also a great time of year to find an accountant. They are generally less busy than they are during the run-up to tax return season (where many of them also charge an extra premium to new clients who join them at that time) and that means youll be able to really do your research to find the one who best fits your business.
Remember, it’s a good idea to find an accountant that you feel comfortable with and who understands your business not just so you can get your tax return completed, but also so you can establish a sound long-term business relationship with them.
Improve your processes
If last year’s tax return was a nightmare to complete, take a look at your internal processes and see where the pain points are. For example, you may have spent January pulling together all of those fiddly expense receipts out of that shoebox or box file you kept them in. Or raiding through your filing cabinet to find all of the important paperwork that you needed.
Emily Coltman is chief accountant to FreeAgent, provider of cloud accounting software for freelancers, micro businesses and accountants. She is passionate about helping the owners of small and growing businesses to escape their ?fear of the numbers? and she translates small business finance and tax into practical common sense speak.
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