31st January is a date that strikes fear into the heart of business owners, freelancers and anyone who HMRC considers self-employed.
Self assessment tax return deadline date.
And it's just three shorter-than-you-think months away.
But fear not! If you've got that creeping feeling of dread rising up in your stomach, this post is for you. I'm going to give you a few simple preparation tips to get you feeling calm and serene about all things tax in no time.
And if you're feeling fully prepped and ready to go? Read on anyway, just in case you've forgotten something...
Find everything you need and make a tax return file
You don't need to put everything in a physical file, you can simply make a folder on your computer called "Tax return [year]" and keep everything in there, if you like. However you do it, make sure it's in a place that's easy to find, access and remember.
The idea is to have everything you could possibly need to help you complete your tax return in one place, so when it comes to submitting it you aren't frantically searching for that one missing thing.
Documents you put in your file could include:
- your Unique Taxpayer Reference number
- your HMRC login details
- Your financial records (income and expenses)
- Invoices you've sent to clients
- Invoices, receipts and any other proof of your expenses
- Bank statements
- Your P60 and payslips, if you are also employed
Once you've submitted your tax return, keep this file somewhere safe, as HMRC may ask to see it. They are entitled to view your records for five years after the tax return deadline date for that year (so for the 2016/17 tax year, you'll need to keep your records until 31st January 2023).
Work out your numbers
This is where you'll either thank or curse yourself.
If you've kept your financial records organised and updated, check over them again and make sure you have all the invoices, receipts and bank statements to back everything up.
If your records are a mess, or you're way behind with your business transactions, set aside a day as soon as you can to record all of your incomings and outgoings and work out your figures. It's boring, but necessary.
You'll want to work out your turnover (the total amount of money you've made), allowable expenses (things like travel expenses and office costs, which are subtracted from your turnover) and profit (turnover minus expenses), as well as any other tax allowances or business income.
Remember, if your total turnover was below £83,000, you don't need to split your allowable expenses into categories, you can simply include your total expenses figure.
And make sure you're keeping up to date with your financial records for the current tax year to make next year's tax return as stress-free as possible.
Find or replace any missing items
Now that you've done the above, you should be aware of any documents you need but can't find, such as receipts, bank statements, or maybe even your HMRC login details.
Make a list of everything you need but don't have and who you need to get in touch with to get it, and spend an hour or so contacting everyone to make sure your records are complete. Do this as soon as you can - sometimes it can take weeks for third parties to get back to you with what you need.
If you can't get the documents you need on time, you can still include the transactions. However, you must tell HMRC if you're using estimated or provisional figures when you file your tax return.
Put money aside for your tax bill
Hopefully, you've been putting money aside regularly throughout the year in preparation for your tax bill. If not, start doing this now. January is usually a post-Christmas financial squeeze as it is without having to conjure up extra money for your tax bill.
If you don't think you'll be able to pay your tax bill, ring the HMRC Business Payment Support Service - they may be able to give you a deadline extension.
Hopefully these tips have left you feeling ready to take on your tax return - now you just need to fill it in and submit it to HMRC before 31st January!
I'm a financial coach and mentor helping female business owners to gain the knowledge and confidence they need to manage their finances successfully and have a positive relationship with money. If you're ready to take control of your finances, click below to find out how I can help you.
I also have a range of amazing resources which you can use to help improve your business finances.