Most business owners are dreading the 31st of January, as this is when their self assessment is due in a digital format and they have to look at their business account.
If the amount of tax and national insurance you have to pay is keeping you up at night, it might be time to tackle the issue early and find ways to make the most out of your profits. And remember that the more tax you have to pay from your business account, the more successful you are, so it is not all bad.
Below you will find a few tips on not getting into debt over your self assessment bill.
The best way of avoiding financial trouble and conflict with the taxman is using online tax calculators that will tell you the exact amount you will need to pay based on your estimated income. This will help you budget and put some money away ahead for your tax and national insurance, so you don’t have to panic in January trying to get the money together.
Keep up to date records
One of the best way of avoiding financial stress and seeing clearer about your business is keeping a simple system to have a real time snapshot of your finances all the time. Whether you are using a spreadsheet, an app, or a book, you will be able to see where you stand, how much money you will get in, and how much tax will be payable. Chances are that you will have a good few months to save up your money between April and the following January. Make the most out of this time.
Ask for deferred payments
If you simply cannot pay all your obligations at once, you can always negotiate with the authorities. You can ask for deferred payments or partial payment, so you don’t have to get into debt over your tax bill. Even if you are facing difficulties, HMRC will want to get their money, and getting paid later is better than not getting the funds at all.
Donate to charity
It is also a good idea to make the most out of your charity donations to reduce your tax bills. This will not only help you increase your business reputation, but also save you money long term. You can donate to a local charity or community center and get free exposure in return. This is a good way of making the most out of your allowances and growing your brand.
Make the most out of your allowances
Knowing your tax and investment allowances is important. If you are using your home or car for business purposes, you will need to find out exactly how much you can claim per mile. Knowing the rules will help you defend your case when you face Tax investigation and show your calculations to HMRC.
There are two things that are sure in life; death and taxes. Why not get prepared for submitting your self assessment by keeping an up to date business account and finding out more about your allowances?