Running a business is a stressful endeavor and you especially do not want the added worry of whether the taxman is going to come knocking on your door because you have underpaid. You may not have previous experience in finance and possibly this aspect of running your business has been a serious source of stress. If so, here are some tips to help guide you and help you keep your business tax compliant and protect yourself from the risk of incurring heavy fines.
It is all about VAT
The main factor of staying tax compliant is paying the correct amount of VAT. You need to be paying the right amount of value-added tax on every you earn as well as including the correct tax calculations on invoices when charging clients. Knowing how to calculate VAT is essential for any business owner, and having access to the right tools can really make a difference when you’re running your own business, as it means fewer sleepless nights and more confidence when it comes to your fiscal health.
Planning and organisation
You should do plenty of research into what other tax commitments your business has in addition to VAT and understand how to address them. Check tax laws regularly as they can change, - remember, ignorance is no defence if you get caught out breaking any of these! You should also keep detailed records of all your outgoings and incomings, so you always have a full picture of your company finances. Even in smaller businesses there are various transactions happening all the time and you need to be able to produce a full report should HMRC ever want to take a look at your finances and possibly send in an auditor.
Safeguard your records
Financial records should be kept for as long as possible as HMRC could request you to pull up records from the previous tax year. Records can also be helpful come tax return season, with budget planning for the following year, checking the progress of your business in general and tracking all your business expenses. HMRC recommends keeping records for no less than 22 months.
Hire an accountant
The safest option for keeping your company tax compliant and getting a good handle on your finances is to simply hire a professional. Even if you do everything right there is the chance that something may pop up that is unpredictable or more complicated than you are able to handle, and it is times like these that a specialist small business tax accountant will be invaluable.
A small business tax accountant will help with preparing tax returns as well as carrying out all the necessary measures to ensure that you are tax compliant. They can also help with advice on how you can reduce your tax risk and deal with any minor issues before they escalate into larger problems.
If you do not have the budget to hire a professional accountant, then you should definitely consider investing in online accounting software. This will help you massively with filing tax returns, producing reports and will save you a significant amount of time that can then be better spent on other aspects of running your business.