Doing your taxes can be tedious at best and confusing at worst. Whether you’ve been doing your own taxes for years, or are only just starting out with your own business, it’s always worth taking the time to do your taxes carefully. This can help you avoid making serious mistakes that are expensive to rectify. Plus, it gives you peace of mind that you’re doing everything right.
Here are 4 tips to help you with your trade business taxes and make sure your return’s up to scratch.
1. Pick the right company type
When you’re setting up your company, you can choose between being a limited company, or a sole trader or limited liability partnership. Setting up as a limited company generally involves more regulations and admin – setting up as a sole trader or limited liability partnership is probably best for most tradespeople.
2. Get your filing system sorted
One of the easiest ways to make sure your taxes go smoothly is to make sure you’ve got an effective filing system sorted. You’ll need to keep all of your receipts and invoices and organise them in a sensible way. This will make it much easier to find the records you need when you need them.
It’s also sensible to keep a comprehensive record of your income and outgoings. It’s essential to have accurate data, as HMRC can audit you at any time if they think your tax filings are inaccurate.
3. Investigate your tax and VAT options
Make sure you think about all the different ways that your tax burden can affect your business. There are different ways to approach tax, and some may be better for your business than others. By writing off your business expenses against the tax you have to pay, you’ll be paying the right amount of tax for your business.
If your business revenue comes in over the VAT threshold, you’ll have to register for VAT. Although charging VAT can seem like extra work and you’ll probably have to pass the cost onto your customers, you can really benefit from registering for VAT.
4. Make sure you know when your deadlines are
It’s vital that you make sure you know when your deadlines are – you’ll get fined if you don’t submit your tax returns on time. Make sure you plan ahead, so you get everything done on time.
Remember that it’s possible to write off your business expenses against your tax burden. You can do this yourself, although you might find it easier to hire a professional accountant to do it for you.
Sorting out your taxes doesn’t have to be difficult. You can easily ensure your tax filing goes smoothly by looking ahead and thinking about all your options. You might even save money!
This article doesn’t represent financial advice – you should always speak to a professional accountant when considering tax and legal options for your company.