As you’ve probably recognised, tax year 2013/14 could turn out pretty tumultuous.
As such, you’re going to need to be on top of your financial game this year. Being lax with tax and forgetful with your finances just won’t do. Mess up, and you could face a multitude of fines or even worse, end up doing a little time!
So, drawing upon some of the expertise here in the Crunch office and reflecting upon some of the financial mistakes I’ve made freelancing, here’s five ways to keep your finances on track in tax year 2013/14….
Know the tax facts
Moira Stuart might assert otherwise, but the reality is tax is definitely taxing. Legislation is constantly changing and frankly, it’s troublesome to keep track of.
All that said, if you’re lacking an accountant, it’s worthwhile trying to get up to speed with the various tax return deadlines and attempting to get your head around what you might be liable to pay. If you’ve managed to read this weeks earlier articles (without dozing off) then you’re on the right sort of lines, but to spruce up your knowledge a little further, it’s worthwhile checking out HMRC’s ‘webinars’ . Surprisingly for HMRC, they’re actually pretty useful.
Create an accounting routine
Unless you’re accountancy inclined, sorting through your finances can be something you endlessly avoid. The longer you put it off though, the worse it’ll be later down the line. I can vouch for that personally. Self-assessment time was made even worse by my accountancy inadequacy.
To spare yourself some grief then, it’s therefore wise to put a little time aside for some bookkeeping, preferably every day or at the very least once or twice a week. If your micro business is really taking off though, look at putting your accounting into an expert’s hands. It might cost a little, but you’ll save yourself some time and limit the likelihood of penalties.
Organise your paperwork
HMRC like records. Financial one’s in preference to the vinyl ones. So, with that in mind, try to develop some sort of system where paperwork is concerned. Chuck all your financial documents into a disorganised draw or shoebox and you could end up struggling to find that important document when you need it most.
Instead, establish some sort of filing system, with different sections for invoices, bank statements and every other aspect of your finances. You might then spare yourself some trouble, come tax return time.
Cloud software, the app explosion, the growth of online accounting; all of this has made things easier regarding the management of money, reducing the complexity once involved in managing micro business finances.
Using some good software, you can keep an eye on your finances and update your accounts, anytime, anywhere (well, provided you’ve got an internet connection). Some of it’s pretty sophisticated, too, and often you’re provided with more features than you’d get going down the more traditional avenues.
Budget, budget and budget again
Not exactly rocket science but it’s something numerous micro businesses can fail to do. To survive and thrive as microbusiness, you’re going to need to be frugal, and it’s here that budgeting can help.
Establish budgets and endeavour to stick to them. Elsewhere, embrace financial tools like cash-flow forecasting. Doing some forecasting on a regular basis, you should be left with a better picture of your finances, and, in turn, you’ll be better placed to legislate for any lean periods.
Hopefully that’ll be enough to help you get your financial affairs in order. Doing all of these, you should come through tax year 2013/14 relatively unscathed. Let me know how you got on next April!