Knowing your business numbers inside out can help you to gain control over your operations. It can also help your business generate higher profit margins, as you will have a better understanding of the cost of your business processes.

Four ways to prepare at the start of the tax year

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The UK tax year runs from 6th April each year to 5th April of the next year. The start of a new tax year is a good time for a self-employed individual to take a look at their finances and operations, making changes where necessary. The start of a tax year is an opportune time for making sure all your business records are up to date and ready for the completion of your tax return and preparation of any year-end accounts.

Issue invoices

Check your invoicing records to ensure that you have issued all your invoices to clients. Initially, this will make sure that all payments due are requested so that prompt payment is more likely, but also starts the payment process for those customers who are regularly late payers. Spend some time considering your payment collection process to look at ways to speed up the payment process.

Claiming all expenses

Claiming for eligible expenses reduces the gross amount of income earned by a business, so it is crucial to claim for all expenses which the company is entitled to. Very often small expense claims are not submitted, but throughout the year they can add up to a significant sum. Eligibility for expenses may change through the tax year, so seek expert advice to make sure you only submit claims for expenses you are eligible for. An accounting service for small business and individuals will make sure that you claim all expenses, while checking eligibility.

Checking bank records

Go through all business records to make sure they correspond with your bank statements. Keeping accurate records will not only provide an accurate snapshot of your financial affairs, but will also comply with the requirements of HMRC, which may fine a company that doesn’t have orderly business records. Keeping orderly records when self-employed will also guarantee that all forecasts and projections are accurate so you can make timely decisions. A good accountant can help with this if you wished.

Minimise tax

This is a good time to make sure you have claimed for all new business equipment and machinery. Capital allowances can be claimed for some business assets, up to specified amounts. Claiming at the right time can mean that the business will benefit from the maximum allowance available for that particular tax year. If you are considering investing in equipment for the business, seek professional advice to ensure you claim the correct allowances. There are other tax reliefs, allowances and expenses which can be claimed by a self-employed individual, to reduce the tax due at the year end.

If you would like advice about preparing for the new tax year, call us to arrange an informal chat.