By Becky Young, Director at Monahans
“In this world, nothing is certain except death and taxes,” quipped Benjamin Franklin.
For some, the notion of taxes may extend to glancing at the Income Tax and NI figures that are deducted from your monthly payslip, before throwing the piece of paper in a draw. But, for the self-employed, there’s a greater onus on keeping a record of what’s coming in and going out. At Monahans, this is something that we get asked about frequently, so here is a brief overview of the record-keeping requirements and the support available.
For the self-employed, sole traders and partners in business partnerships, the buck stops with you when it comes to tax returns. Records of sales, business expenses, VAT (if registered), PAYE (if you employ anyone), personal income (from the likes of investments and property rentals) and grants, such as those claimed through the Self-Employment Income Support Scheme (SEISS), are vital. What’s more, make sure you have a handle on money owed that you haven’t yet received, the value of stock, how much has been invested in the business and any dividends.
If you haven’t yet joined the digital world of cloud accounting and the myriad apps that can support your reporting, hard copies of documentation are important when calculating the P&L for your tax return, and possibly to be shown to HMRC if asked. HMRC has ramped up its investigations into tax fraud, so it’s more important than ever to ensure that you’re on top of things. As such, keep all sales invoices, till rolls, bank statements, receipts, and even chequebook stubs, if you are still using these.
As intimated, there is a wealth of technology available to make the record-keeping process as easy as clicking a button. Many apps also eliminate the need for hard copies, with records stored on the cloud, where they are protected from potential loss or damage. Monahans’ digital accounting solutions team can offer advice on which software is right for your business, ensuring that information is being recorded in the correct format from the get-go.
Seeking year-end accounting support can help you decipher the complexities of the process. But, doing so late can lead to holes in the information your accountant will need, if vital records aren’t being kept. There are also those who approach an accountant to prepare accounts retrospectively, but have not kept a stock count or a work in progress calculation at year-end – a crucial step.
Businesses that can nail their record keeping from day one won’t have to spend valuable time trying to untangle previous activity and back-date transactions, which is a far more time-intensive process. Although often seen as an additional expense, accountants can offer advice on the information needed to complete a tax return, so investing in support early will make the final process smoother and quicker.
If you need support, speak to our team today. We’ll be more than happy to talk you through the options that are right for you and your business.
To find out more about Monahans visit the website at: www.monahans.co.uk or call: 01793 818300