Heading into a new financial year as a business owner is a wonderful opportunity to reflect on the year take stock (literally) of where you are and set some goals for yourself and the business for the new year! This article is here to bring you all of that accountancy and finance gold but in plain English and in actionable steps.

What dates do I need to know now I’m self-employed?

The personal tax financial year runs from the 6th April to the 5th April each year. Each year as a self employed individual, you will have to submit a self-assessment tax return for the previous year. So for the 2021/22 tax year (the year that has just ended) you’ll have to submit your tax return by:

·        31st October 2022 for paper returns

·        31st January 2023 for online tax returns

If you became self employed during the 2021/22 tax year and haven’t yet registered, it’s okay you have until the 5th October 2022 to register.

How do I know if I have to complete a self-assessment tax return?

As a general rule, if you receive income that is not taxed when you receive it, you should complete a self-assessment tax return. Examples of income that you might receive that is not taxed at source are sole traders, directors of limited companies, rental income from properties you own, income from other countries and other investment incomes. 

There’s one super handy allowance, called the trading allowance that means that if you’ve earned less than £1,000 in property income or from a small trade or side hustle (like an Etsy shop) then you do not have to report this to HMRC do have a super useful online tool where you can answer some simple questions and they’ll tell you if you need to complete a self-assessment tax return!

I’m a business owner, how do I withdraw profits?

As a business owner, quite often the cash in your bank doesn’t equal cash available to spend and it can feel quite confusing trying to navigate this.If you'd like to make sure that heading into a new tax year, you understand how you can withdraw your profits and pay yourself as a business owner.

Can pensions help me to reduce my tax bill?

Yes! Putting money into your pension as a business owner isn’t just about saving for the future, it can save you tax now, too. If you’re the owner of a limited company then pension contributions can be treated as an allowable business expense and offset against your company’s corporation tax bill!

If I need to pay taxes, how can I plan and save for them?

Planning and saving for tax is one of the very best ways to get ahead of the game and to remove lots of the anxieties that can be associated with being self-employed! 

The top tips when saving for off payroll taxes are:

1. It’s really important to pull together the whole picture of your personal income when calculating taxes on your off payroll income as you’ll use your personal allowances and payroll income to establish how much you’ll be taxed elsewhere.

2. Once you’ve zoomed out and you’ve got the whole picture of your personal finances, using calculators like HMRC’s income tax calculator really is the very best way to plan and save for your tax bill.

3. Using online banks with saving spaces and pots also mean that you can keep your tax savings completely separate but instantly available.

When should I get an accountant?

Ah, great question! Drum roll please... you should get an accountant, when you want one! The benefits you get from working with an accountant are numerous but the main reasons are: 

1. Peace of mind, not only do you have a professional doing all of the statutory bits for you, but you also gain a trusted advisor to work with throughout the year. You can ask lots of questions, get training and elevate your business by working closely together

2. Time savings, lots of business owners simply don’t have the time to prepare all of their statutory requirements. We find that for many people the finance side of the business is one of the first things that gets outsourced!

3. Tax efficiency, for some individuals that complete their own taxes, it’s like walking through airport security. You know you’ve not done anything wrong but you can’t help but feel a bit hot and sweaty! Having an accountant can really give you the guidance to claim all of your allowable expenses, lots of which some business owners don’t even k

4. now they can claim!

Financial MOTs

Okay so we’ve covered some big questions here about taxes, profits and accountants so here’s a super easy “financial MOT” checklist that you can use within your business to give yourself MOTs throughout the year to stay on top of things and take back control! There’s nothing in here that if you miss it once or twice will cause chaos, these are just little extras that you can add into your business routine to take your business to the next level.

Daily tasks:

·        Check your bank balance

·        Be aware of future receipts and payments coming in and out of your bank account

Weekly tasks:

·        Raise sales invoices if required

·        Record supplier and customer payments and receipts

Monthly tasks:

·        Reconcile your bank account

·        Review your aged receivables (who owes you money?)

·        Review your aged payables (who do you owe money to?)

·        Review and process your payroll, if applicable

·        Run a profit and loss report and check for accuracy

·        Set aside cash for taxes

·        Run a balance sheet report and check for accuracy

Parting words

It’s super important when you’re embracing the finances within your business to remember, that no one (and I really mean no one) knows your business better than you. Take things one step at a time, make small improvements as you go and always reach out for support and guidance if you need it.