Working as a freelancer can be all consuming and finding the time to keep your accounts in order can easily fall to the bottom of the priority list. All too frequently January hits and you are faced with the task of the tax return deadline, without the time to get prepared.
If you have left it a little late in the day, not to worry – here are 5 tax tips to help freelancers juggle their workload and get the tax return filed in time, thus avoiding the dreaded late penalty fines.
GET A BUSINESS BANK ACCOUNT
If your freelance business structure is running as a sole trader you may have already set up a business account, if not, maybe look at it as a new years resolution to get this in place. Keeping your personal and business finances completely separate leads to less headaches come tax return time.
When your personal expenses are not tied up with your business expenses, it’s much easier to identify and collate all your business transactions in one place. Not only will this simplify the whole process for you but it will also save you lots of valuable time scrolling through endless payments.
Having a separate business account will also make it easy to plan for your future as you can easily look at your costs and see how much money is tied up in your business.
MAKE YOUR INCOME EASY TO IDENTIFY
Being able to get a real time view of your income at any time is one bonus of online banking, which will help when declaring your income on your self assessment. Make it a weekly or monthly task throughout 2019 to keep evidence of all income on your computer or in the cloud, so that it’s all in one place and easy to obtain for your tax return next time.
BAGS OF RECEIPTS AND STATEMENTS ARE NOT THE WAY FORWARD
All expenses and purchases for your business can be used to reduce your taxable income so you need to find a way to retain all that information without losing any of it. Do you really want to be sifting through a whole years worth of fuel or stationery receipts in January, getting stressed about the looming deadline? Spending time doing that and reminiscing over receipts isn’t going to get the job done, plus that’s time you could spend on your professional development or your portfolio of work.
Any expense that is wholly and exclusively incurred in your business activities should be considered. Furthermore, you need to retain your receipts for 5 years, so keeping track of them digitally would assist you in time and save on space too.
MAKE IT A HABIT
It takes a while to form a habit and yes, it may not seem like an exciting one either, but getting into the routine of assigning some time to regularly document your income and expenses will soon seem like second nature. Not only will you be amazingly organised for your self assessment ahead of the self assessment deadline, you will also get to see exactly how your business is performing much more regularly. Make it a business priority like any other and you will be able to use this information to see the bigger picture.
IS IT TIME FOR HELP?
Freelancing can be incredibly rewarding and provide an amazing flexible work/life balance that appeals to many, however sometimes you are just so busy it can be hard to find the time to take care of life admin. If you are struggling to get on top of your paperwork and it’s affecting your business growth, now may be the time to pass on the task to a professional. For a small fee, an accountant will take over filing your self assessment tax return, freeing up your time to do what you do best and focus on the business.
With 25 years experience, there really isn’t much we haven’t seen before so if you need help or advice with your tax return or are thinking of setting up as a sole trader and want to know more, get in touch with our expert team who can advise on the best business structure for you.
Call 01244 400315 or email [email protected]