Preparing and completing your Self Assessment in your first year of self employment is a tricky thing to do, particularly if you’re naturally a little disorganised like me. The end of my first year in self employment came around surprisingly quickly, and I was left with a pile of receipts, a bank account that contained far too many trips to Nandos and New Look and a mad panic to get it all into some form of order. I’ve no doubt that this meant I missed quite a few receipts or tax-deductible activities thanks to my own lack of organisation.
My second year has been a lot more organised, and it’s mainly because I learnt the following lessons…
Five things to do when preparing for your tax return
- Keep all your receipts, train tickets and email confirmations in a file/folder, and make a note on each item reminding you what it’s for. Basically, anything you purchase for business reasons. It’ll save you a lot of time when the end of the year comes and you’re desperately searching through your diary/email to find out what a receipt was for. Invest in a decent printer so you can print off any confirmations as soon as you get them. I’ve just purchased this Canon wifi printer to do this, and it’s a bargain at £34.95 (plus tax-deductible)!
- Consider a business bank account. Or avoid putting trips to McDonalds or La Senza on your card. Neither looks particularly professional (as I discovered), and it makes it easier to work everything out if all your spending activities on one account are business-related. You could always get a credit card just for business purchases if you don’t want to open a new bank account.
- Set up a great invoicing system, so you can hit the print button at the end of the year. I really like Freshbooks for easy invoicing, and you can enter your expenses there too.
- If you can afford it, get an accountant. They’ll keep you in check throughout the year, give you guidance and you can hand over all your documents at the end of the year for them to file a tax return on your behalf.
- Aim to put away 30% of your salary each month in savings. This should cover your tax bill, and any other small business expenses. Then if you’ve got anything left after paying your bill, you can spend it on a little self-congratulatory trip away (Or, in my case, shoes). Much better than freaking out about a chunky tax bill that you haven’t prepared for.
You might also like to have a look at HMRC’s guide to self employed tax returns to find out how to sign up, fill in your form and what dates your form have to be in by. They’re a fairly friendly and helpful bunch, so you could always give them a call if you’ve got any further questions.
Do you have any top tips for anyone doing their tax return/Self Assessment for the first time? Or have you made a tax mistake others can learn from? Share them in the comments!
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