End of the financial year: tips for the self-employed
Thursday 5th April will be the last day of the 2017/18 financial year, and if you’re a freelancer, sole trader or business owner, this will obviously be an important date for your diary. However, this can also be a stressful time for the self-employed, especially if the thought of spreadsheets and tax returns makes you shudder.
The best way to deal with the transition is to get organised. Now is the time to put your finances in order and prepare yourself to fill out your tax return. Not sure where to start? Here are four essential tips for dealing with the end of the financial year as a self-employed person.
- Get all your paperwork in order
We all start the year with good intentions, but as the work piles up it can be easy to let things slip, and this might leave your business finances in a bit of a mess. Maybe you’ve been throwing your receipts in a drawer, or you’ve forgotten to file your invoices properly – whatever the issue, now is the time to deal with it so you can start the new year fresh. Having the year’s paperwork in order before you sit down to do your tax return will make the whole process much less daunting.
- Don’t wait to do your tax return
The deadline for online tax returns in the UK is January 2018, and it can be tempting to wait until the last minute to fill it out, but you will save yourself a lot of worry if you get it done early instead. Completing your tax return in April or May, just after the financial year ends, will mean your accounts are still fresh in your mind and you’ll be able to pick up on anomalies more easily. Plus, filing your tax return early doesn’t mean you need to pay any sooner; instead it will give you more time to prepare for your next tax bill.
- Understand how to deal with unpaid invoices
Come the end of the financial year, there’s usually an invoice or two that hasn’t yet been paid – so what do you do about these? If you manage your accounts on a ‘cash basis’, you only declare on your tax return the money that came in and went out during that tax year. Therefore, if you raise an invoice in March but it isn’t paid until May (after the tax year has ended), that will be included in next year’s tax return. On the other hand, if you are using the ‘accrual basis’, you declare on your tax return all income you earned that year, including invoices you have raised but not yet been paid for.
- Take a look at your business
Now is a great time to embrace the end-of-year spirit and take a proper look at your business. You don’t need to go into all the incomings and outgoings quite yet, but it’s a good idea to get a general overview of how your finances have fared over the year. Has your business made a profit, and if not, what can be done about it? Have you been working sustainable hours for acceptable rates? The end of the financial year is an excellent time to step back and honestly appraise your business so that you can do even better next year.
Do you need help getting your business finances in order? At Get Ahead VA, our virtual assistants can assist with bookkeeping, year-end accounts and tax returns, leaving you to get on with the important stuff. Please give us a call on 01483 332220 or email us at office@getaheadva.com. We pride ourselves on being the staff you don’t see, but the difference you do.T
