As tax season slowly but surely approaches, it’s incredibly important to create a smooth tax filing system so you can make sure that you pay the exact amount of tax that you owe.
Whether you’re self-employed, a small business owner, or an individual taxpayer, getting organised now can save you time, stress, and potentially money. Here are some general tips and top accounting solutions to help streamline your tax preparation.
Begin organising your documents early
The earlier you begin with your tax work, the more methodically you can work. The more methodically you work, the fewer mistakes you’ll make – and if you start well enough in advance, you’ll have plenty of time to spot and rectify errors.
To start, you should organise your documents, which may include P60 or P45 forms, bank statements, invoices, and receipts for business expenses. Preferably, you would have already worked out a data management system so key documents are ready whenever you need them – if not, this is the perfect time to get started.
Maximise your deductions
Filing your tax return isn’t just about reporting your income so you pay the tax you owe; it’s also about reporting your business expenses so you actually pay the tax you owe.
HMRC lets businesses deduct the cost of their business expenses from their pre-tax profit. That reduces the figure that HMRC applies income/corporation tax rates to, ultimately resulting in a lower tax bill for you.
You can only claim for business-related expenses, such as office supplies, travel expenses, home office costs, and professional fees (e.g., accountant fees). Where you use an item for both personal and business purposes, you can claim part of the cost of the item.
Take your time
During tax season, it’s vital to take your time. Rushing can lead to mistakes and missed deductions. Carefully review your financial records, double-check calculations, and ensure everything is in order. A thoughtful approach not only reduces stress but also enhances accuracy, making for a smoother filing experience.
Work with an accountant
Filing your tax return may seem simple, but unfortunately the opposite is the truth. It’s easy to get confused and make mistakes, getting in trouble with HMRC as a result – no matter how much time you take to check and double check your figures.
As a result, we would always recommend you work with an accountant to help you out. All you need to do is provide them with all the documents they need to work out your income and business expenditure. They’ll do the rest!
Working with an accountant doesn’t just dramatically decrease the chance an error finds its way onto your tax return – it also saves you a lot of time and stress. That’s worth the fee, we’d say!
Consider cloud accounting software for next time
It’s easy to be snowed under a lot of paperwork while working on your tax return, feeling rushed, and getting frustrated. For the next tax year, why not use cloud accounting software?
These platforms offer a seamless way to manage your finances year-round by automating data entry, expense tracking, and other real-time financial data to seriously assist you with data management and tracking. When it comes to tax season, that means all your data will already be sorted and, thanks to the power of automation tools, almost guaranteed to be accurate.
While this does mean learning a new system for data management (no, cloud accounting software will not do everything for you; it just seriously reduces the need for you to key data into a spreadsheet), you’ll feel the benefits all year round – not just during tax season.
Need help with your tax return this tax season? Get in touch. Let’s see how we can help.