3 Ways to Simplify Tax Filing
How to simplify your tax admin and gain more time to grow your small business
According to The Federation of Small Businesses, business owners lose almost two weeks every single year simply by trying to keep on top of their tax paperwork.
The study showed that between two and eight hours each month is wasted dealing with tax forms and many paid their taxes late because they were either confused about payment dates, or just struggling to understand what was required.
A key finding from the survey is that 75% of businesses have purchased software to keep up-to-date with their tax administration, as well as hired bookkeepers and accountants.
Now of course you can employ an accountant to help you out but here are Three top tips to simplify your tax admin.
Small unincorporated businesses that have an income that does not exceed the VAT registration threshold of £82,000 per annum, can choose to be taxed on the money that flows into and out of the businesses, as opposed to normal accounting rules.
It means that you won’t need to make end of year adjustments. For more information see the Government’s guide to Cash Basis.
All unincorporated businesses can now choose to use fixed rates to figure out what expenses you can claim for where there is a mix of private and business use.
Up until now, one had to work out the actual amounts for business use but now motoring expenses, expenses relating to business use of home, and adjustments for private use of business premises are covered under simplified expenses.
You can claim a standard mileage allowance for the number of business miles you travel each year; you can claim a flat rate based on the number of hours working from home; and you can claim a flat rate for the private use of portion of costs, where someone lives at the business premises e.g. pub or B&B.
Did you know that HMRC have introduced a new system for PAYE, employers and pension providers? It’s called Real-Time Information (RTI) and it means that you inform the taxman about tax and other deductions at the very moment payments are made.
This saves you time and effort reporting all the payments at the end of the financial year. By keeping your records up-to-date, your employees will pay the right amount of tax every month.
This article was written by Doug Barden, managing partner at Barlow Andrews