Last Updated on Apr 8, 2020 by James W
Many new startups or freelancers find the idea of filing their tax return absolutely terrifying. But, for most, an accountant is a luxury they simply can’t afford in the early years. Your accounts and tax returns will seem stressful because there can be serious consequences if you get it wrong or miss deadlines. However, it’s not actually that difficult. Most people can do it. You just need to be careful. Here are some top tips to help you.
A common mistake people make is ignoring their accounts to start with. They don’t make that much money, so it doesn’t matter yet. This isn’t the case. As soon as you start earning, it counts. Make sure you keep track of any income, register as self-employed, and file your invoices and receipts from the very start.
Have a filing system. This could be anything that works for you, but it’s a good idea to separate invoices into months and receipts into categories. If you just dump everything into a folder or box you are making things harder for yourself later.
Set up spreadsheets as well as keeping physical copies of receipts and invoices. This will make it much easier to see totals later in the year. If you’re an Excel novice, you can download templates and change them to suit your needs. It’s a good idea to have spreadsheets for budgets, income, outgoings, and expenses. Then you might want a master sheet so you can easily see how this money all fits together and what you are left with.
Keep on Top of it
This might sound like a lot of work, but once you’ve got your spreadsheets and filing systems in place it’s just about keeping on top of it. Spend an hour or two at the end of each week filing and filling things in. If it’s easier to manage, you could even do this every day. Just make sure you don’t forget or put it off.
If you do find you struggle with bookkeeping, you could consider taking a course. A masters of accounting is much cheaper than the long-term hire of an accountant and means you could confidently manage your own accounts without ever needing to rely on anyone else. One huge benefit of an online masters of accounting is that studying online makes it easy to do it around your work commitments.
It’s important to understand expenses fully before you start claiming. Unfortunately, there isn’t one master list that you can consult. But, anything purchased for the use of your business can be written off on your taxes. This includes things like stationery, travel, business trips, advertising costs, a portion of your bills if you work from home, dining, wages, and materials. Have a look at this list for more information.