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Self-assessment: Beat those January bookkeeping blues

Self-assessment: Beat those January bookkeeping blues
Enterprise Nation
Enterprise Nation
Enterprise Nation
 

Posted: Mon 9th Jan 2012

With the January 31st self assessment deadline looming, many sole traders, partnerships and freelancers across the UK will be starting to feel anxious about getting their books into shape. The blues may well be setting in as they sift through spreadsheets and a year's worth of receipts - and those missing the deadline will face a fixed fine from HM Revenue & Customs (HMRC), of £100 or more.

Fortunately, we have Diana Flier, senior compliance analyst at Intuit UK, on hand to offer tips and advice for hitting the self-assessment deadline. If you're starting to feel the blues about completing your self-assessment return on time, you'll not want to be in this position next year - so you need to take steps to take the pain away: Start as soon as possible. HMRC advises that "you must keep records of all your business transactions". There are key dates and deadlines that small businesses need to be aware of throughout the year. Put these milestones in your calendar now so that deadlines don't come as a surprise. Bookkeeping should be a priority for your business. According to a recent Intuit report entitled, The Three Year Glitch, more than one in five small businesses still rely on pen and paper accounting. And one in ten businesses that have been operating for less than five years ran out of cash. While financial management typically falls fairly low down on a small business owner's agenda, it is more than just a legal requirement - it can make or break your business. Getting into and keeping up good bookkeeping habits is crucial to both meeting HRMC compliance standards and deadlines, but also key to running a successful business. Accounting software can do the hard work for you. As well as allocating time each week to review and update the books, small business owners should consider using accounting software such as QuickBooks, which is available in a desktop and online version. This will not only to help you track expenses in real-time and manage cash flow, but means that should HMRC come to your door, you have all the necessary records at hand to comply with tax obligations.

Completing your self-assessment return

But you still have to make  this January's deadline. Here's what you need to know: 1. If you are planning to send in a paper tax return, you've already missed the October 31st deadline. You must instead submit your tax return online by January 31st 2012. 2. Your online tax return must reach HMRC by midnight on January 31st 2012 - without fail! If you haven't sent an online tax return before, you need to register for HMRC Online Services by January 21st. This will allow HMRC time to send your Activation Code. You can register here for Self Assessment, or get in touch with HRMC for any further advice or help. 3. If you're unsure if you need to complete a tax return, it's worth contacting HRMC to check.  However, if you have relatively straightforward tax affairs and already pay tax through PAYE (Pay As You Earn), you probably won't need to complete a tax return. But if you have more complicated tax affairs - or income from several sources - you may need to complete one. 4. The penalties for late returns are pretty steep and the longer you delay, the more you'll have to pay:

  • 1 day late: A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.

  • 3 months late: £10 for each following day - up to 90 days, maximum £900. This is as well as the fixed penalty above.

  • 6 months late: £300, or 5% of the tax due, whichever is the higher. This is as well as the penalties above.

  • 12 months late: £300, or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.

5. When you're all set, you can file your tax return online. So, while your bookkeeping blues may seem here to stay, you can make things a lot easier when it comes to 2013's January tax return deadline. Start early, move your books onto an accounting software package, and realise that you're not just doing this for HMRC - it will be better for your business in the long (and short!) term. Diana Flier Intuit 1Diana Flier is a payroll and compliance expert with more than 20 years' experience in payroll systems and processes. In her role at Intuit, she works closely with small businesses to help solve their financial management issues, particular in the areas of payroll and VAT compliance. Photo credit: Camila Rueda Lopez

 
Enterprise Nation
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Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.
 

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