But where does this fear and worry come from? Why is it so daunting? Well, mostly it comes down to ignorance! Have you ever had a conversation with an accountant about tax? Have you walked away feeling more confused than ever? Yes? Well that's not surprising. With most subjects in business there is a right or wrong answer. There may be several ways to make a product, but they all end up with the same product at the end of the process, so you choose the one that suits you best. There may be several ways of transporting your product to your customer, but the result is the same, your customer receives your product. In accounting there seems to be a lot of "grey" areas and it depends on the advice you are given as to what the final result will be. Last year I attended two talks, two weeks apart by two different accountants, and there were several areas that they actually contradicted each other on. So how can we, small business owners who aren't accountants, have any confidence in filing our own self assessments when two accountants don't actually agree on what can be claimed as expenses? Surely it is impossible! Well it certainly isn't easy, but there are ways to smooth the road. Firstly, if you use an accounting package to record your finances you will find a lot of answers. Accounts packages usually have a preloaded list of nominal codes. Nominal codes are allocated to your sales, purchases and expenses automatically when you process them through your accounts package, which gives you a head start on knowing what can be included in your self assessment. If, for example, you have an expense and you aren't sure which nominal code it belongs to then you can either search online for suggestions from other people, some of whom may be accountants, or you could call HMRC and ask their opinion. If they tell you it is not allowable as an expense claim then you know that you can't include it, but if it is allowable they may be able to suggest a suitable code. But never accept the first answer you find, always look for two or three sources that confirm the same piece of advice. At the end of the year you can usually pull off a profit and loss report through your accounts package which will give you your annual turnover, annual expenses and your annual profit, all pieces of information needed for your tax return, and all available at the push of a button without spending hours with a calculator! If you don't currently use an accounts package and need to calculate your profit and loss manually then you may want to think about making a change for next year, it will be easier in the long run! Secondly, completing your self assessment as soon as HMRC request it can significantly speed up the process, because if you need to contact them with questions you won't wait long for your call to be answered, and you will have a better memory of anything that is more unusual in your accounts. If you have a larger business with employed staff or are Limited it is advisable to have an accountant do your tax return for you, but if you are a sole trader it is more cost effective to do it yourself. Thirdly, know that although HMRC will issue fines if you file your Tax Return late, if you make mistakes or fail to do it at all, their primary concern is people that are purposely evading tax. They are not a bunch of ogres getting ready to drag you into court for every tiny error – give them a call and speak to them about any concerns or questions, you might be surprised at how nice they can be! To make it easier to prepare why not download my free Self Assessment Checklist below and don't forget to give me any feedback on how it can be improved in the comments below.
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AuthorJamie has spent many years working in administrative roles, she has also spent time as a stay at home mum and now loves the flexibility of working from her home office and being available for her family whenever they need her. Archives
June 2017
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