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Why you should already be on top of your 2019/2020 tax return.
The summer can be a quiet time for small businesses in particular, and the temptation can be to more or less down tools until your clients have enough of a “back to school” feeling to need your services again. Even if you’re using the quiet time to scope out the competition or undertake some professional development opportunities, your tax return is probably the last thing on your mind.
So why should you be thinking about it now? Apart from the obvious smug aura, you will gain for not scrambling to the wire just after Christmas, there are sound business reasons why getting essential paperwork out of the way now is one of the most useful business decisions you can make.
- Things can (and do) go wrong at HMRC – and neither is it an unusual occurrence. Those of us who have been self-employed for over a decade will remember the deadline extension for submitting our 2006/2007 returns as HMRC’s website crashed. A strike by call centre staff in 2012 caused a similar 48-hour extension, and there were low-key extensions in January 2017 for those who had experienced HMRC-related delays in receiving new passwords. However, you can’t rely on technical or human foul-ups to give you an extra few days’ breathing space, as you’re more likely to receive a £100 fine than extra time.
- ‘Something’ might happen – and not necessarily something bad, either. Hopefully, you have income protection insurance in place in case of sudden illness, but that ‘something’ could just as easily be the type of big-league contract you’ve been chasing since you formed your company, and that will take every spare moment you have when you should be taking care of paperwork instead. One inevitable is that Christmas will happen, and it seems to be getting earlier every year. Seasoned freelancers will tell you that they’re working on Christmas campaigns as early as May, and those affected by seasonal feast and famine will also complain that Christmas now starts on Black Friday, and doesn’t end until Valentine’s Day. This inevitably means that everything beyond your direct control takes longer.
- Your accountant will love you – what do you mean you don’t have an accountant? As we’ve already said, even the smallest one-man or one-woman outfit can’t afford to not have an accountant in their corner. Also, finding someone now could even mean a tax refund you weren’t expecting, as they can help you to prepare your accounts in the most financially efficient way for your business. Don’t forget that it can take a while to get everything together that you need to file your tax return, so if you’re newly self-employed, that means a P45, a P60, and any invoices and bank statements relating to the startup of your new venture.
It might feel like the ‘wrong’ time of year to be thinking about your self-assessment return, but getting on top of paperwork when everyone else is wondering where they last saw their passport could be the best thing you could do for your business this year.
Credit to our sister company ShoeBox.co.uk for the blog post.