How to Master your Business Tax Preparation
Tax season is well underway. If you’re reading this, you may be a little late to the party. But this year, that’s okay. That’s because the deadline for your Self-Assessment tax return has been extended until February 28th. While the deadline for most limited companies has passed, sole traders normally have until January 31st to submit their Self-Assessment. This year, however, HMRC is waiving late filing and late payment penalties.
But one thing never changes: as a business owner, it’s your job to find out if you’re owed anything or whether there’s still stuff you need to pay. As the age-old saying goes, there are few things inevitable in life and tax is one of them. Taxes can be manic and uninspiring - but straightforward if you know what you’re doing.
To help you hit the new deadline, we’ve put together a list of things business owners should consider when sorting out their taxes. From new tools to old school tips, we’re sure you’ll find something to help you along the way.
How do I prepare my taxes for my small business?
During tax season, business owners prepare their financial documents from the previous year. Deadlines vary depending on whether you’re a sole trader or limited company.
For business owners, tax returns are hurdles – and there's no getting around them. It’s a case of looking back at payments you forgot you even made and finding out if you’re owed anything or whether there’s still stuff to be paid. Preparation is, therefore, key. Without it, last-minute panic can creep in. Here’s how to avoid that.
Go digital
As we all know by now, the world has entered a new digital age. Industries and practices have shifted to online territories and customers have followed. And with Making Tax Digital (MTD) set to arrive in April 2024, businesses are being advised to make the switch now.
The argument for 'digital' is there for all to see. With a helping hand from technology, we can access, send and receive information in a fraction of the time. This trend spans everyday life – including tax. Here’s how technology can help you with yours:
- Real-time access
Technology puts the information you need right in front of you. With financial data at your fingertips, you can make instant business decisions. You can also assess how much you owe, and get a clearer idea of your spending, on the go.
- Save valuable time
Sorting out your tax takes up valuable working hours and eats into your free time. With digital tools, you no longer search for the correct documents, or type out the data yourself. That means more time for you to spend on your business and yourself.
- Budget better
It all comes down to paying the right amount on tax – no more, no less. That’s only possible with efficient budgeting. With the correct technology, you can see things like cash flow and get a firmer grip on your business admin. There are a host of software providers out there that make this possible, including Dext.
Technology is a great starting point. It brings everything in line and introduces order to what can be a messy process. It also provides a platform from which you can tackle business admin and, in this case, tax.
Aside from the lure of digital, there are other things to consider when sorting out your tax return.
Shift to Year-Round Management
A step in the right direction is the year-round approach. Until recently, many businesses followed a 'once-a-year' strategy which requires a lot of work in a short space of time. With a year-round strategy, you stay on top of your business admin throughout the year. That also allows you to track performance and budget and forecast better.
If you’re waiting until January to assess the state of your books, this only limits your planning window. With a year-round service, you can adapt your business model based on events as and when they happen.
Your tax return isn’t something you can afford to rush, so it’s important you do your best to organise early. That all starts with a year-end strategy.
Communicate with your accountant
Lean on the experts wherever you can. That means if you’re lucky enough to have an accountant, go to them for advice on anything you’re unsure on. Tax season is where accountants and bookkeepers come into their own - so do your best to stay in touch with yours.
If you’re stuck on submitting your tax return, they'll have the answers. If not, there are plenty of online resources to help you navigate the process – HM Revenue and Customs is a good place to start.
Don’t panic
The most important rule for tax season is not to panic. With small business tax preparation, there will always be underlying stress and it may feel like an inconvenience. Unfortunately, that’s the way tax is. The sooner you prepare your taxes and utilise the tools and resources available, the more likely you are to sail through unscathed.
As you can imagine, tax season (and general business admin), is far easier with the support of technology. When you automate, you save time, you budget better, and you get a much clearer picture of where your business is at.
It’s now up to you to make all that happen. Why not start by finding out more about the upcoming changes in our recent Making Tax Digital guide?
Where does Dext fit in?
If you’re looking for a straightforward way to organise your tax, we hear you. At Dext, we’re always looking to make business admin easy - which means helping you ready for your tax return. We can’t do it for you, but we can get everything you need right in front of you.
With powerful tools, we extract the key data from invoices, bills, receipts, bank statements and more. Everything you need for your tax return is organised line by line and accessible in real time. Click here to start a free trial and see for yourself.
