16 Dec 2024
For many sole traders and small business owners, the self assessment tax return deadline is a dreaded period filled with stress, last-minute calculations, and sometimes, unexpected surprises. But it doesn’t have to be this way. With a little forward planning and regular financial habits, you can transform the way you feel about your tax return.
Here’s how you can make tax time less stressful:
Understand Your Tax Obligations
At InterTax we believe that knowing exactly what you owe is crucial to planning ahead for the deadline. You’ll need to set aside money for both income tax and National Insurance contributions. If you’re earning above the VAT threshold, you’ll also need to account for VAT payments.
We help our clients by giving them an indication of how much money they should be setting aside each month. We also encourage our clients to get the information we need to us as early as possible so that we can get your tax return filed in good time, meaning that you know exactly how much you need to pay and when.
Set Up a Dedicated Tax Savings Account
One of the best ways to ensure you’re financially prepared is by setting up a separate savings account specifically for your tax payments. Each time you get paid from clients, transfer a percentage of your earnings into this account.
Some bank accounts have savings spaces which are ideal for putting money aside for tax, VAT and for a rainy day!
A good rule is to set aside 20-30% of your income for taxes. This way, you’ll always have funds available when your tax bill arrives.
Track Your Income and Expenses Regularly
Staying on top of your finances throughout the year will prevent any nasty surprises at tax time. Use accounting software to log your income and expenses monthly. This will give you a clear view of your profitability and help you forecast your tax liability.
We would advise keeping on top of your bookkeeping on at least a monthly basis to ensure consistency and accuracy. The more often you do it the more accurate it will be to get real time information on your finances.
Produce quarterly reports
Once a quarter, set aside time to review your finances. Look at your income, expenses, and how much you’ve saved for taxes. This regular check-in helps you identify any gaps early, so you can adjust your savings rate if necessary.
At InterTax we offer a Management Reports service which allows us to give our clients an insight into their finances and Cash Flow Forecasts which can predict trends in order for you to take action ahead of any challenges you may face. This can be crucial when growing your business.
Automate Where You Can
Automating your savings can be a game-changer. Set up automatic transfers from your business account to your tax savings account. This takes the decision-making out of your hands and ensures you’re consistently putting money aside.
You can also automate reminders for tax deadlines or set up recurring tasks in your calendar for financial reviews.
Work with a Bookkeeper
If managing your tax savings and financial records feels overwhelming, consider partnering with a bookkeeper like ourselves. We’ll help you stay organised, ensure you’re meeting all your obligations, and provide peace of mind throughout the year.
Use Tax Time as a Business Health Check
Tax time doesn’t have to be purely transactional. Use it as an opportunity to reflect on your business performance. Are you meeting your income goals? Can you reduce expenses? Regularly saving for taxes puts you in control, so you can make informed decisions about your business’s future.
January doesn’t have to be stressful. By developing a habit of saving consistently throughout the year, you’ll not only avoid the last-minute scramble but also gain greater control over your finances.
Ready to take the stress out of tax time? Get in touch today.
31 Oct 2024
As the year draws to a close, many small business owners in Manchester are searching for ways to express gratitude to their employees. Offering thoughtful gestures, whether a simple thank you or a festive treat, can be both rewarding and cost-effective. Did you know you can provide your staff with perks without incurring tax liabilities? Welcome to the world of trivial benefits.
What Are Trivial Benefits?
Trivial benefits are low-value gifts or perks that can enhance employee morale without triggering tax or National Insurance obligations. According to HMRC guidelines, businesses can offer employees perks valued at £50 or less, as long as they meet specific criteria.
Criteria for Trivial Benefits
To qualify as trivial benefits, gifts must adhere to the following rules:
- Value: Each gift must be worth less than £50 (including VAT).
- Type: Benefits must not be cash or cash vouchers (gift vouchers are acceptable).
- Reason: Gifts should not be provided as a reward for work or performance.
- Contract: Benefits cannot be included in an employee’s contract or part of their regular benefits package.
For example, if you present your staff with a box of chocolates or a coffee shop gift card that meets these conditions, you’re on the right track!
Examples of Trivial Benefits
Here are some excellent ideas for trivial benefits that can help you appreciate your team, all while staying within the £50 limit:
- A bottle of wine or a selection of festive treats
- A gift voucher for a popular local restaurant
- A bouquet of flowers to brighten their workspace
- Tickets to a cultural or sporting event in Manchester
These small tokens of appreciation can significantly enhance employee morale without leading to tax complications. Remember, however, that these benefits must not be tied to performance or obligations.
Keep an Eye on the Limit!
It’s essential to remember that the £50 limit applies to each individual benefit, not the total amount you can give in a year. This means you can provide multiple trivial benefits throughout the year. For instance, you might celebrate your staff’s birthdays with a small gift and then surprise them with something special during the holiday season.
If a gift exceeds the £50 threshold, it loses its trivial benefits status, meaning you will have to account for tax and National Insurance on the entire amount, not just the excess.
Trivial Benefits for Directors in Manchester
Directors of limited companies with fewer than five shareholders can also take advantage of trivial benefits. In this case, there is an annual limit of £300 for benefits provided to directors or their family members. This means you can give yourself and your spouse four £50 gifts throughout the year, provided the total doesn’t exceed £300, with no tax implications.
Why Trivial Benefits Are Important for Your Business
Implementing trivial benefits is a savvy way to foster a positive work culture without straining your budget. These small perks make employees feel valued and appreciated, enhancing job satisfaction and improving retention rates.
From a financial perspective, trivial benefits allow you to reward your team without incurring additional tax or National Insurance costs. Plus, if you maintain accurate records, these perks won’t complicate your bookkeeping.
Keeping Track of Trivial Benefits
While offering trivial benefits is straightforward, it’s crucial to manage them properly in your accounts. Here’s how to ensure compliance:
- Keep Receipts: Maintain receipts for all benefits, ensuring each is under £50.
- Record Details: Log the specifics of each gift, including the date and recipient.
- Verify Eligibility: Ensure benefits comply with HMRC criteria—no cash or performance-related gifts.
Proper record-keeping will help you demonstrate compliance with HMRC rules if needed.
Conclusion: Enhance Employee Satisfaction While Minimizing Tax Liabilities
Trivial benefits may seem small, but they can significantly boost employee happiness and help manage your business’s tax obligations. By offering thoughtful, low-cost perks, you can elevate team morale while keeping your financial records in order.
Need assistance in tracking your business’s expenses and perks? Contact me today to discover how I can help ensure your finances remain compliant and tax-efficient throughout the year.
5 Oct 2023
If you want to avoid the stress of the tax period, follow these four simple steps to prepare your business in advance.
Tax season is one of the most stressful periods of the year for a business owner. With proper planning, however, you can change that.
It’s essential to start preparing for the filing of your business tax return in advance so you have time to gather all relevant records.
Take a look at the following tax preparation tips that can make the upcoming tax season less stressful for both business owners and their accountants.
Organise Your Tax Paperwork
Before anything else, it may be a good idea to sort out any past years’ documents, if you haven’t already. Start organising your books to make sure that you’re prepared when the paperwork starts to come in.
Tax paperwork should be organised by category and you may want to make copies of important documents received by post.
Categorise Your Business Expenses
Another time-saving tip is to start organising and categorising your business expenses weeks before the tax return due date.
You can claim most of your business expenses as tax deductions. But if you’re not sure which expenses you can claim, check out the official guide on HMRC’s website.
All business expenses must be sorted out and explained in detail. Finally, don’t forget to itemise your expenses.
Alternatively, if you outsource your tax preparation, you will want to hold on to all your documents for when it’s time for your accountant or accounting firm to prepare the tax return.
Check Whether You Can Get Deductions and Credits
Small businesses may qualify for a number of tax credits. However, don’t wait till the last minute. Check in advance whether you’re qualified for these credits.
Deductions reduce your taxable income and credits are even better, as they directly reduce the amount of tax owed. Your accountant or tax preparation software will have a list of tax deductions that apply to your business.
Get Help
Tax season is very stressful for your bookkeepers and accounting team, assuming that you have them on the payroll. Even if they’ve been doing great the whole year, they may need some extra help now.
A smart business owner won’t let his or her accounting staff burn out during the tax period. Ask them if they need help and if so, make sure to relieve the burden.
It’s essential to get your tax done correctly and on time, which is less likely to happen if you try to save money on accounting staff during this hectic period.
Advance Prep Wins Out
For most business owners, tax season is far from the favourite time of the year. However, it’s not an excuse for you to wait until the last moment to start preparing your tax return.
To avoid unnecessary stress, the best course of action is to prepare in advance.
It won’t trouble you nearly as much if you’re to find that something is missing, but that’s only possible if you leave enough time to sort things out.
Book a free consultation here, to learn more about our accounting services and how can help you grow your business.
5 Oct 2023
As a small business owner, you may be used to taking the DIY approach. After all, you’re most likely a marketer, financial director, HR manager and payroll administrator, to name but a few of your many responsibilities. However, although your business may be small, there’s one area that really does call for professional help – and that’s filing your tax return. Let’s take a look at four of the main reasons you shouldn’t do your taxes yourself this season.
1. You’re Not a Numbers Person
We’d all like to believe that we’re good at absolutely everything, but the truth is that not everyone is good with numbers. If you don’t have an affinity for mathematics then doing your taxes yourself is probably not the best idea.
Even if you’re competent enough at everyday calculations, taxes are a whole different ball game. Calculating your taxes is a very complex process; there’s a reason that chartered accountants have to spend so many years in training.
A simple mistake on your tax return can cause you to pay the wrong amount of tax and even result in harsh penalties that can seriously threaten your small business. It really isn’t worth the risk.
2. It’s a Waste of Your Time
Taxes are notoriously time-consuming and as a busy business owner, your time is a precious resource that you can ill-afford to waste. After all, the time that you spend doing your taxes is time you can’t spend growing your business. It’s important to sit down and think about how much your time is actually worth before you squander it all trying to figure out your taxes. Think of time in the same way as you think of money, and learn to invest it wisely.
3. Tax Laws Change Constantly
Tax laws change all the time and it can be incredibly difficult to stay on top of all the latest rules and regulations – especially when you already have a business to run. When tax season rolls around, the chances are you won’t know about all of the latest changes which could lead to you making mistakes on your tax return or missing out on new opportunities to save money.
It’s an accountant’s job to keep up to date on any changes and then take advantage of these opportunities to save you money, so that you pocket as much of your income as possible. Remember that a quality accountant will always save you more than their wages.
4. The Internet is Full of Misinformation
In this day and age, the DIY approach to any task usually involves several Google searches. The problem is that although the internet is a wonderful resource, it’s full of incorrect or outdated information. As discussed, tax laws and deductions change all the time, so the article you’re reading may no longer be accurate. Furthermore, tax rules vary hugely from country to country, so you might end up making a mistake because you read advice that doesn’t apply to your business.
Sifting through all of this information and checking for veracity is a hugely time-consuming task, so you’re far better off working with a tax professional who has relevant experience within your specific industry. That way, you can have your questions immediately answered by someone who knows what they’re talking about and won’t have to waste time falling down Google rabbit holes.
Summary
The needs of every business are different, but if the above issues resonate with you then you should consider hiring an accountant when tax season rolls around. A great accountant is an investment in the financial health of your business, and will undoubtedly save you a significant amount of time, money and stress in the long run.
2 Oct 2023
For small business owners, tax season can be a stressful and daunting time of year. It makes sense that you’d rather not think about it, but as a bookkeeper, every year I see business owners feeling stressed as the season approaches because they know deep down that rushing things and leaving it to the last minute can lead to mistakes and penalties. That’s why it makes sense to get ready for tax season right now. In this blog post, we’ll explore why now is the time to get your self-assessment tax return done, instead of waiting until the deadline of January 31st. We’ll offer tips on how to outsource your bookkeeping, why the deadline is not a target, and how it’s crucial to know your numbers to help motivate you to complete your tax return.
You don’t want to be doing your tax return over the holidays.*
It’s no secret that the holidays are a busy time of year – especially for small business owners. With the added pressure of balancing work and family commitments, it’s easy to put off sending your tax return until January. However, with the deadline of January 31st fast-approaching, don’t let yourself end up cramming your tax return in over the holiday period. Instead, tackle it now and enjoy a stress-free break.
The deadline is a deadline, not a target.
Many small business owners falsely believe that the filing deadline of January 31st is a “target” rather than a firm deadline. This could not be further from the truth. The HM Revenue and Customs (HMRC) takes non-compliance very seriously, and failing to submit your tax return by the deadline could result in a fine. Get it done and off of the list as soon as you can.
Outsource your bookkeeping so you don’t need to do it.
One of the best ways to get your tax return completed now is to outsource your bookkeeping. If you don’t have the time or expertise to handle this task in-house, think about getting the help of a professional bookkeeper or accountant. Outsourcing your bookkeeping can not only save you time and energy, but it can also help you stay organised and ensure your tax filings are completed accurately and on time.
Here’s the unexpected benefit
Many small businesses see the tax return as the ultimate goal, but at InterTax we know that the most important reason to get your tax return completed now rather than later is to know your numbers. It gives you time to save for your tax bill if you haven’t already (talk to me about this, I can help), and it is key to knowing your numbers.
Your tax position reflects your business performance for a certain frame of time, and we expect you want to know how you’re performing in as near to real time as possible. Understanding your financial situation is vital in running a successful small business. By knowing your financial figures in-depth, you can make informed decisions for your business, plan for the future, and stay on top of your finances.
Conclusion
Getting your tax return done as early as possible is crucial. Of course, this avoids unnecessary added stress, mistakes and penalties, but it means you have feedback on how your business is doing. At InterTax we encourage our clients to file their tax returns as early as possible and we’d love to chat to you about how we can help you with yours. You can reach out to us by clicking https://intertax.co.uk/book-consultation/
So why wait? Let’s get your tax return sorted now so you can move on to more exciting things.
1 Aug 2023
Tax season can be a stressful time for freelancers. There are many steps you need to take in order to make the process as smooth and easy as possible. In this blog post, we will go over how to prepare for tax season so that your taxes are filed on time, with all necessary documents included.
#1 – Track Your Income
The first step in preparing for tax season is tracking your income. The best way to do this is to keep a careful record of your invoices and payments all year round. However, if you have neglected to do this then now is the time to get your books in order.
#2 – Track Your Expenses
In order to determine if you owe money or will receive a tax return, it’s important that you keep track of your expenses. As mentioned above, if you have neglected to do this then now is the time.
The best way to stay on top of expense tracking is to do it little and often. Cloud accounting software is a great option, allowing you to easily access your financial data from anywhere.
#3 – Understand Your Deductible Expenses
It’s important to understand what expenses you can deduct from your taxes. Tax rules are notoriously complicated, so it’s best to consult a qualified accountant for assistance. You don’t want to miss out on lucrative deductions and tax credits.
#4 – Organise Your Accounts
It’s important to be organized when filing your taxes. You need to have all of the necessary documents at hand, including bank statements and invoices.
You should also make sure you are up-to-date with any deadlines for submitting forms or information.
You can use cloud accounting software to easily organize your account information, as well as provide you with reminders for filing deadlines.
#5 – Plan Ahead
It’s important to plan ahead and make sure you can complete your taxes as soon as possible. This will allow for the maximum amount of time to file all necessary documents, such as tax returns or information forms.
#6 – Use Cloud Accounting Software
There are many great cloud accounting options out there, including Xero and Quickbooks. These options will allow you to easily track your income, expenses, deductibles, accounts and filing deadlines in one place. They also make it easy to receive reminders about upcoming deadlines.
#7 – Choose the Right Accountant
It’s important to choose an accountant that specializes in working with freelancers and understands the ins and outs of your industry. An accountant who is qualified and experienced will be able to guide you through the tax process, ensuring everything is filed properly on time. They will also save you money by finding you all available deductions and credits.
Of course, an accountant is not just for tax season but should be a part of your year-round financial planning. Whether you are filing taxes for the first time, or have been freelancing for years, having an accountant can help save money and stress throughout the entire process.
Summary
By following these steps, you can ensure that your taxes are filed on time with all necessary documents included. By taking the time now to stay organized and plan ahead, you’ll be able to enjoy a stress-free tax season!
Book a free consultation here, to learn more about how our tax services can support you.
