Filing business taxes is such a pain, but unfortunately, it’s an important part of being a business owner. If you get it wrong, you could end up paying a lot of penalties and if you’re just starting out, you probably can’t afford to spend that money. You also don’t want to spend valuable time dealing with taxes when you could be spending that time improving your business and generating revenue. What you need to be doing is filing your taxes accurately without spending too much time on it. These are some of the best ways to take the pain out of filing your business taxes.
Keep Good Records
You need a lot of information about your income, your spending, and your employees when you file your taxes. If all of that information is disorganized and some of it is missing, you’re going to spend ages trying to pull it all together so you can fill out your tax forms. That’s why keeping good records is absolutely essential. Make sure that you’re keeping all of your invoices and receipts and you’ve got good financial records. Most importantly, file them properly right away, rather than leaving it until later. It takes a second to file one receipt properly, it takes days to collect them all and do it in one go.
Once you’ve gathered all of the information you need, it’s time to start filling out all of the forms. You can still fill out a paper form if you would like to, but it’s so much easier to file online. It’s a lot quicker and you can send it over right away. The new Making Tax Digital for VAT that the HMRC are introducing next year will make it compulsory for businesses to file online anyway. It’s likely that all of your taxes will need to be filed online in the near future so you should start familiarising yourself with the process now so you’re prepared.
Invest In Your Business
If you want to reduce the amount of tax that you’re paying, it’s important that you invest money in your business. Any money that you put back into the business is tax deductible so you can massively reduce your tax bill by improving infrastructure, hiring new employees, increasing wages, and expanding your operation. All of these things are going to help your business to grow and it’ll make your tax bill a lot more manageable as well.
Clear Employee Definitions
More companies are using remote workers and freelancers on a regular basis and that raises a few tax issues. It’s up to you to deduct income tax from full-time employees but freelancers that are considered self-employed have to handle their own taxes. However, it isn’t always clear whether somebody is considered an employee for tax purposes or not. If you list somebody as a freelancer and the HMRC disagree, you’ll still have to pay their income tax even though you haven’t deducted it from their wages. It’s important that you’re clear on your employee definitions and you know whether you need to deduct their tax or not. If you’re aren’t sure, it’s best to consult an employment lawyer and get their opinion.
Filing your taxes always seems like a daunting task but it doesn’t need to be if you just follow these steps.