Key tax dates and deadlines for 2018/19
It is an inevitable reality that, for anyone earning a livin...
By Jonathan London on 4th June 2015
As everyone’s favourite arachnid superhero was once told, ‘with great power, comes great responsibility’. Starting up as self-employed gives you the superpower of control; you control your workload, your hours at your desk, and the clients and projects you take on. Unfortunately, you also have to take control of your newly created self-employed accounts – and this can be an overwhelming responsibility.
Here’s a brief outline of what you need to know in order to whip your finances into shape:
Even if you’re a sole trader, you’ll probably find it easier to have a separate bank account for your business-related finances. Although it’s not a legal requirement to do so, it makes tracking your business expenditure a much easier task, and it looks more professional to your clients. Importantly, having a separate bank account also prevents your accountant from accidentally discovering the extortionate amount of money you spend every week in Starbucks!
However if you want to stick to your existing personal account, check the terms and conditions of it first – it might be that your bank won’t allow you to use it for business purposes.
If you’re operating as a Limited Company, you have to set up a business bank account for your company. There are a lot of business accounts on the market, and choosing the right account can save you money in the long run. Our guide on how to choose a business bank account will help you make the right decision for you.
Creating an invoice might seem like an overwhelming task but they’re surprisingly easy. As long as you make sure that you have all of the relevant details in place, the only decision you need to make is on how to bill your work. This will likely vary from client to client, with some being billed on a per-hour basis and others based per project. You can post or email the invoice to your client, or why not make things simpler by using the invoicing function on our app?
Unless you agree to a longer payment term upfront, the deadline for paying most invoices is 30 days from the date the work is completed. If your invoice payment is overdue, you can now add statutory interest to the amount, charge a fixed fee (from £40) and also reclaim the costs of chasing for payment if it exceeds the fixed fee amount. Not only does this give your clients an incentive to pay you on time, it also means you’re reimbursed for time spent chasing those payments which should have already been made. We’ve compiled some handy tips if you do have a late paying client, and how to deal with them.
One great benefit to being self-employed is that you can claim expenses, and therefore don’t pay tax on them. However be careful with what you claim for, as you can only claim for purchases which are for business use – so you won’t be able to claim against that recent surfboard impulse buy (unless, of course, you happen to be a surfing instructor). Claiming expenses as a sole trader is really easy; keep hold of your receipts for the year, tot them up and put on your self-assessment tax return. It’s best to file the receipts away – HMRC recommend at least seven years.
At the end of January every year, there’s always a lot of media hype about the impending tax return deadline – and with good reason; you can be charged penalties if you miss the deadline. Completing a Self-Assessment Tax Return is how you let HMRC how much money you owe them, based on the taxable profits of your self-employed income. If you’re newly self-employed, you need to register with HMRC and you’ll be given a Unique Taxpayer Reference (UTR) number (here’s also some advice should you ever lose your UTR number).
In order to complete your tax return, you’ll need to have your income and expenses to hand and ready to transpose. If it’s been a busy working year, the process can be an arduous one – but the good news is that you can save your progress midway through. Depending on your company and financial set-up, you may also need to include information on dividends, rental income and pension contributions too. Tax returns have a notoriously bad reputation for a reason; they can be complicated and if you’ve not kept a diligent record of your finances you could be in for a shock. However, we can help. Our tax return service starts at just £100 VAT – and it means you can spend January 31 feeling smug and drinking champagne.
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