When you’re a tradesperson, your business taxes can be very confusing. Whether you’re recently self-employed or have run a successful business for years, doing your taxes carefully can save you money. Also, it can be expensive to do them incorrectly, especially if you don’t plan your finances appropriately.
So, we’ve come up with a guide to doing your taxes as a tradesperson.
Choosing the right company type
There are a number of different legal structures that you could use to form your company. You could set up as a limited company, but there’s more administration and regulation involved. Establishing as a sole trader or limited liability partnership is usually the best route for most tradespeople.
Make sure you keep detailed records
The best way to make sure your tax filing goes as smoothly as possible is to ensure that you’ve got records of your finances. Keep a comprehensive list of your income and outgoings to ensure that you’ve got proof of your taxable income for the year. Remember that HMRC can audit you if they think your tax filings are inaccurate, so it’s essential to have accurate data.
It’s also important to keep these records organised. While simply keeping all of your receipts and invoices is useful, you’ll want to also ensure that they’re organised, so you can quickly get to the data you need.
Plan for your tax filing
It’s important that you meet the deadlines for submitting your tax returns. There are fines for missing these deadlines, so make sure that you plan ahead to have everything done on time. It’s also good to make sure that you plan your finances so that you’re not caught out by your tax bill. Remember that you can write off your business expenses against your tax burden. You can do this yourself, although it may be easier to engage the services of a professional accountant.
Explore your tax and VAT options
It’s important that you’ve considered all of the different ways that your tax burden can affect your business. Remember that it may be beneficial to approach tax in different ways. By writing off your business expenses against the tax that you have to pay, you’ll be paying the appropriate amount of tax for your business.
If your business revenue is over the VAT threshold, you’ll need to register for VAT. The VAT threshold for 2017 is £83,000 in a 12 month period. While charging VAT might be an extra hassle, and you’ll usually have to pass the cost onto your customers, it can be worth it to become VAT registered.
Dealing with HMRC and taxes doesn’t have to be a complicated issue. By planning ahead and carefully considering all of your options, you can make sure that your tax filing goes smoothly. You could even save money!
If you’ve got any advice for dealing with tax of your own, let us know. You can tweet us @QuotatisPro.
The above article does not represent financial advice and should not be treated as such. You should always speak to a professional accountant when considering legal and tax options for your company.