With the current business year nearing its close, business owners are scrambling to assess their taxes for the upcoming self-assessment tax bill. Owners who classify as ‘self-employed’ should get up on their feet and prepare to dig long and deep into their business exchanges for the first six months if they want to get things in order. If you haven’t started on yours yet, here are a few quick reminders in case you’ve forgotten to keep track all this time.
How am I considered self-employed?
Small businesses are tasked to pay for sometaxes including, but not limited to Corporation Tax, Value Added Tax, and Self-Assessment Tax. The Self-Assessment Tax Return can be appliedto individuals under the ‘self-employed’ category. If you’re unsure if you qualifyas a ‘self-employed’ individual, HRMC has a clear list of guidelines. To be sure, the checklist for being self-employed is as follows:
- Someone who’s allowed to hire staff under a contract to work for the business
- Someone who knows where, how, and what work should be done to perform your services.
- Someone who has the last vote on how a business is going
- Someone who works on your own time or work for other people
- Someone responsible for dealing with both losses and profits
These loose guidelines can be a bit tricky if you’re working through an agency, but freelancers and small business owners are under ‘self-employed’ and are required to fill out a Self-Assessment tax return.
Compiling the contents of your Self-Assessment Tax Return
Before you get on your knees to do the digging in your drawers for receipts of expenses, you have to take noteif all of your costsare in check. For small businesses, the standard ones fall under the following:
- Travel expenses.These include parking, fuel, and public transportation fares
- Office expenses.Phone bills, office lease, or heating and electricity bills
- Financial fees.Company insurance and bank charges
- Marketing costs. Includes renton a website domain and ad placement
- Staff expenses.Subcontractor payments and monthly salaries
If you don’t have an office or if your work is home-based, if you qualify as self-employed you can still claim a percentage of the returns on necessities such as internet and phone bills, energy bills, and mortgage payments. You might have to defend the distinction between your personalexpenses and your business costs if you work at home.
Digging up your past year
It’s essential to keep a record of your gains and expenses as you run your business. Be prepared to have your documents ready for filing before the deadline of online tax returns by the 31stof January in the coming year.
If you’re having difficulty in keeping track of what receipts to save and how to backtrack your steps, don’t be afraid to hire an accountant. Getting a helping hand by consulting with professional accountants in Central London is better than getting your paperwork all over the place.