Tax season is well underway. Take a deep breath, roll up the sleeves and look back at payments you forgot you even made. 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. Unfortunately, tax is one of them. Taxes can be manic and uninspiring. But straightforward if you know what you’re doing.
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. While the deadline for most limited companies is towards the end of December, sole traders have until January 31st to submit their Self-Assessment (now extended until February 28th).
For business owners, tax returns are hurdles – and there’s no getting around them. Preparation is key. And without it, last-minute panic often creeps in. Here’s how to avoid that.
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:
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.
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 small business tax preparation.
Shift to Year-Round Management
A step in the right direction is the year-round approach. Many businesses deploy 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.
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.
Of course, we’ve made our feelings clear. 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 give your business the head start it needs when it comes to tax? You can find out more about MTD and the upcoming changes in our Making Tax Digital guide.
Instead, if you’d like to have a look how we help organise business admin, simply click below. We extract the information you need from receipts, bills, bank statements and more – tax-ready data in your hands. Feel free to explore.