8 New Tax Year resolutions: how to run a successful small business
Although the new tax year isn’t usually welcomed in with as much excitement as the 1st of January, it arguably deserves more of your attention if you run a small business. By forming a list of financial resolutions, you can ensure you make this next tax year your best one yet.
Here, we’ll take a look at eight New Tax Year resolutions you can make to help you run a successful small business this tax year.
1. I will keep track of my expenses
We know how easy it is to lose a receipt here and there, especially if you’re using your business card when out and about. We also know how easy it is to shove your receipts to the bottom of a bits and bobs drawer instead of taking the time to properly order and process them.
However, saving and retaining all your business receipts – and properly managing them – is important to ensure healthy cash flow. Not only that, but if you don’t keep your receipts, you’re going to struggle to claim back your allowable expenses.
Just a few of the expenses you might be eligible to claim include:
Business mileage.
Train tickets.
Laptops.
PPE.
Stamps.
If you’ve been working from home (as many more of us have been as a result of the pandemic), you may also be able to claim tax relief for the extra use of your gas and electricity, metred water and business phone calls. You can find more information about this on the GOV.UK site.
Ultimately, understanding what expenses you’re allowed to claim – and keeping clear records of your expenses and receipts – might add a few minutes to the end of each working day but it’ll save you a great deal of time (and potentially money) in the long run. Just think: you’ll never have to turn your whole office upside down hunting for those elusive receipts at the end of a tax year ever again!
2. I will keep on top of sales income
It might sound obvious, but you’d be surprised how many of us don’t keep close tabs on our sales income.
Running a successful small business is all about cash flow. You need to make sure you’re receiving funds from your customers on a timely basis so that you can keep up-to-date with your outgoings – such as ensuring you can pay your employees or suppliers on time.
First, we’d recommend keeping good records. Yes, you can do this effectively using a pen and paper but it’ll be much easier using a spreadsheet or, better yet, accounting software such as QuickBooks.
It’s also important to establish a routine for monitoring unpaid invoices. It’s not just something you should check when your card gets declined or you get an angry call from a supplier. Instead, set aside time each week to go through the sales invoices you’ve submitted and to chase any that are unpaid if needed.
3. I will be more organised
A lot of us probably resolve to be more organised on a regular basis, but what exactly should that involve?
Well, in terms of your business finances, we’d recommend retaining a folder for your accountant that holds all the necessary documents for your Self Assessment. This includes employment details, P45, P60, P11D, pension contributions, savings interest and dividend slips.
You can also do the same thing for your Company Tax Return. By collating all the information you need in one place (such as your receipts, invoices and payment records), your accountant will be able to complete your return quickly and efficiently, saving you time and money.
4. I will put key dates in my diary
Avoid the last-minute scramble to get your Self Assessment or Company Tax Return submitted before the deadline by putting key filing dates in your diary.
The Self Assessment deadline is 31st January if you’re submitting online or 31st October if you’re filing it on paper. The deadline for filing your P11D, on the other hand, is 6th July (your P11D is a form you can use to report benefits in kind that you’ve received from your company, such as a company car, an interest-free loan or free health insurance).
If you’re the director of a limited company, you’ll have company deadlines to keep track of too, many of which will fall around your ‘accounting reference date’ (this is normally the last day of the month during which you incorporated your company). Deadlines you’ll want to keep on your radar might include:
CT600 form.
Statutory (or Year-End) Accounts.
Corporation Tax Return.
Corporation Tax payment.
VAT return.
Confirmation Statement.
Every company is different and not all of the above will necessarily apply to you. So, sit down with your accountant and ask them what filing dates you’ll need to keep an eye on. This way, you can make sure you don’t get caught out.
5. I will pay myself and my employees fairly
Of course, regardless of legislation, it’s worth regularly reviewing what you pay your employees to make sure it’s reflective of their experience and the value they’re each bringing to the company. You should also reflect on the amount you’re paying yourself to make sure you’re making the best use of your personal tax-free allowance. This is £12,570 for the current tax year.
However, on top of this, you’ll need to make sure that you’re paying yourself and your employees in accordance with legislation.
You probably already know about the National Living Wage, which was formerly known as the National Minimum Wage. As of April 2021, this is now 19p higher than it was during the tax year 2020-21. So, you’ll have to make sure you’re paying all workers aged 23 or over at least £8.91 per hour (unless they’re in the first year of an apprenticeship scheme).
You’ll also need to keep all your payroll records for at least three years. This will allow you to prove that you’re paying the National Living Wage if HMRC decides to conduct an investigation.
6. I will improve my financial business performance
The key to running a successful small business is to be continuously self-improving. If you find yourself regularly using the phrase ‘that’s just how we do it,’ then something probably needs to change.
In terms of your business’ financial performance, we’d recommend sitting down with your accountant once a year to discuss how your costs are looking in comparison to the year before. This way, not only can you avoid making the same mistakes as you did in the past. You can also analyse whether your systems and processes are keeping up with your business’ needs as it continues to evolve and grow.
Your accountant will be able to help you pinpoint areas where you could improve efficiencies and work with you to develop systems that will enable that to happen, considering a review of the cash flow forecast and daily cost analysis of your business.
7. I will become more tax-efficient
Nobody likes paying more tax than they have to. Making sure that you’re being as tax-efficient as possible starts with open communication with your accountant.
Helping your accountant to understand the ins and outs of your personal circumstances will enable them to best advise you on how you can become more tax efficient. If you run a limited company, this might involve changing how (and when) you pay yourself to make sure you’re making full use of your personal tax-free allowance. It could also involve changing the balance of income that you receive through PAYE versus dividends, and ensuring that your company expenses are being paid through the company as opposed to through personal accounts.
Every individual and every company is different, so there’s no ‘one size fits all.’ The more your accountant can tailor their advice to your situation, the better. That brings us onto...
8. I will get an accountant
If you don’t already have an accountant, this is probably one of the most powerful New Tax Year resolutions you could make. Of course, we’re slightly biased, but working with an accountant will normally save you more money than you end up spending, as they’ll know all about how to help you become more tax efficient.
Not only that, but your accountant can give you bespoke advice to help you run your small business even more efficiently in future years, helping you to automate processes or saving you time by working with you using online accounting software.
At Day’s Accountancy, we take the time to get to know you and your business so that we can tailor our advice to your specific needs and goals. That might mean ongoing support and access to your QuickBooks account so that we can review and report on your spendings and outgoings in real-time; it might be about taking on everything to do with payroll so that you don’t have to; or it may simply be about submitting that yearly tax return for you that you dread doing.
Whether you’re a Director running a limited company, a sole trader or an individual who needs to submit a Self Assessment tax return, just get in touch. We’ll offer you a free consultation over a cup of tea to talk about how we can help. We look forward to hearing from you!