While it doesn’t quite hold the same excitement that surrounds the start of a real New Year, it’s worth making some financial resolutions as we enter into the 2019/20 tax year is one of your best yet.
If you’re more of a watcher than a reader, we have a couple of short webinars that will give you some useful tips on how you make sure your next Self Assessment isn’t a royal pain.
Below we’ll take you through our top 7 new year resolutions.
#1 I will claim all of my expenses
Having a clear understanding of what you can and can’t claim as expenses when you’re a freelancer or small business owner helps keep your business running and maintaining its cashflow.
By knowing your allowable business expenses, you can lower your reported profit. This will, in turn, reduce the amount of tax you pay and increase the amount of money that stays in your business. Claiming every single expense you’re entitled to – whether it’s office pens or a new computer – will leave you better off than just paying for them out of your own pocket.
You can claim a wide range of business expenses, including:
- Office equipment
- Work uniform (as long as it carries the company logo – clothing for personal use cannot be claimed, and general business attire cannot be claimed as a uniform expense.)
- Protective work clothing (e.g. eye goggles, if it’s a business necessity)
- Some forms of travel (e.g. journeys that are made for work purposes outside of your normal commute)
If you’re unsure whether something counts as a business expense, check with your accountant or HMRC.
#2 I will be more organised
Let’s be honest, no one really enjoys even thinking about tax, let alone completing Self Assessments and other tax returns. It can be a painful, drawn-out meander through a year’s worth of accounts, bookkeeping, and receipts.
However, with a little bit of organisation, thinking about the forthcoming tax year may not seem as daunting. ‘When we’re organised, we think more clearly. We’re in tune with our targets and how to reach them. We have systems in place for carrying out our work – and regular planning ensures we keep priorities at the forefront.’
Maybe you’d find it easier to keep on top of things with great online cloud accounting software.
#3 Make it a date
Keep forgetting when the Self Assessment deadline is (31st October for paper filing, 31st January for online filing)? Not sure when you need to file your P11D (6th July)? Reach for your tablet or smartphone and get those important financial dates in your diary.
Being fully aware of when these important tax deadlines occur will make the whole process seem more streamlined. In fact, if you run a limited company we’ve got a handy article with all of the deadlines and other director’s responsibilities you need to know about.
#4 I will pay myself and my employees fairly
If you’ve been freelancing for the previous 12 months, it’s worth going over your books and taking a look at your rates. Were there any projects you worked on that you felt you sold yourself short on?
Making sure you’re getting paid appropriately for your work is imperative, not only to keep your business ticking over but also your self-worth and motivation in check. We have a useful day rate tool to see how rates in your area have changed over time.
If you’re running a company with employees, chances are you’re probably already aware of the government’s ‘National Living Wage’ – essentially a ‘premium’ on top of the existing National Minimum Wage (and not to be confused with the Real Living Wage).
The National Living Wage entitles all workers aged 25 or over, except those in the first year of an apprenticeship scheme, to at least £8.21 per hour (from April 2019) – a rise of 38p on the 2018 rate.
As an employer, you need to keep payroll documentation for three years to prove you’re paying either the National Minimum Wage or the National Living Wage to your employees, should there be an investigation by HMRC.
#5 Master your paperwork
Do you really need to keep that printout? Do you even need to print something out in the first place? Unless what you’re holding is a receipt or something to do with tax or payroll, chances are you can file it under ‘B’ for ‘bin’.
Keep paperwork stored safely and create backups if you can. Google Drive, One Drive from Microsoft, iCloud or Dropbox are all excellent for doing this. They let you photograph documents then store them for easy access and safe-keeping.
But it’s still good to get a head start on the financial year and ensure your business puts its best foot forward.
#6 I will get out more
When you’re running your own business, it’s all too easy to end up chained to your desk. Try to schedule in time away from your usual place of work.
Regularly attending networking events and industry meetups not only provides a welcome change of scenery, but also the opportunity to meet like-minded individuals, promote your business and, hopefully, pull in some new clients.
#7 Get an accountant to take some of the strain!
Well, we would say this, wouldn’t we! Getting an accountant is a great way to keep on top of your finances. They’ll remind you of tax deadlines and payments due, show you ways of keeping your accounts in excellent shape, and advise you on allowable expenses and how to report them so you’re as tax efficient as possible.
They can help you with things like estimating how much tax and National Insurance you’ll need to pay every six months or quarterly for VAT. They’ll also help to ensure you’re not forgetting any payments on account, which catches many people out every year.