Top 5 tips to make self assessment as painless as possible
http://www.accountingfacts.net/articles/472/1/Top-5-tips-to-make-self-assessment-as-painless-as-possible/Page1.html
Daniel Egerton
Daniel Egerton writes on behalf of SamsTax, a company providing simple online self employed tax software to help business people keep track of their income and expenditure with ease throughout the year. By Daniel Egerton
Published on 10/21/2008
If you are self employed or run a small business, it is highly important to keep control of your finances with a good bookkeeping software or other accounting system There are two main reasons for this – so that you can manage your business effectively and so that you can accurately complete your self assessment tax return
Top 5 tips to make self assessment as painless as possible
If you are self employed or run a small business, it is highly important to keep control of your finances with a good bookkeeping software or other accounting system. There are two main reasons for this – so that you can manage your business effectively and so that you can accurately complete your self assessment tax return.
However, once you have that system in place, you still need to make sure that you are recording all transactions properly and updating records into your chosen system in a regular and organised way. Otherwise, by the end of the tax year, you could find yourself buried under a mountain of unidentified documents.
Here are the top five tips on making self assessment simple, for anyone who has to fill in the self assessment tax return.
1) File documents immediately
If you don’t file them straight away, documents are bound to pile up into a frightening & unmanageable heap. To keep things clear, store all invoices and receipts in two separate files - one for sales and one for purchases. Give each of these transactions a unique reference number and record it in whatever bookkeeping software or accounts system you have chosen. File the documents in order of this number, so that you can quickly retrieve the information should you be subjected to a tax or VAT inspection.
2) Categorise your transaction documents
Record the details of each of your transactions in straightforward sections such as insurance, wages, and rent, and also remember to record your own income, VAT inputs and outputs if applicable, and petty cash, as this will make them easier to retrieve when needed. Petty cash can be made easier to track if you store receipts along with a certain amount of cash (say, £100), then, when you need to replenish the pot, remove the receipts and log them into your bookkeeping system.
3) Always ask for receipts
It is vital to have records of all your transactions. In order to offset your expenses against your profits, you must be able to prove that those expenses are wholly, exclusively and necessarily incurred in relation to your business. For those who are VAT registered, it is necessary to keep VAT receipts so that you can reclaim the VAT element of the transaction.
4) Use bank statements regularly to check your accounts
In order to consolidate your bookkeeping and ensure you are recording every transaction made, as well as to ensure that the bank has not made an error in your accounts, check your bank statement against your own records at least once a month. To do this effectively you will need to take the previous bank balance, add on any payments you have received and deduct any you have made, and ensure that the result is the same as the current bank balance. If there are errors then make sure to follow up on them.
5) Carefully consider the best way to record your transactions
For really straightforward bookkeeping, you can use a specialised online bookkeeping software. There are many to choose from, at all varying prices and with different benefits, but most require a certain level of knowledge about accounting. However, there are some simpler bookkeeping software packages out there.
However, once you have that system in place, you still need to make sure that you are recording all transactions properly and updating records into your chosen system in a regular and organised way. Otherwise, by the end of the tax year, you could find yourself buried under a mountain of unidentified documents.
Here are the top five tips on making self assessment simple, for anyone who has to fill in the self assessment tax return.
1) File documents immediately
If you don’t file them straight away, documents are bound to pile up into a frightening & unmanageable heap. To keep things clear, store all invoices and receipts in two separate files - one for sales and one for purchases. Give each of these transactions a unique reference number and record it in whatever bookkeeping software or accounts system you have chosen. File the documents in order of this number, so that you can quickly retrieve the information should you be subjected to a tax or VAT inspection.
2) Categorise your transaction documents
Record the details of each of your transactions in straightforward sections such as insurance, wages, and rent, and also remember to record your own income, VAT inputs and outputs if applicable, and petty cash, as this will make them easier to retrieve when needed. Petty cash can be made easier to track if you store receipts along with a certain amount of cash (say, £100), then, when you need to replenish the pot, remove the receipts and log them into your bookkeeping system.
3) Always ask for receipts
It is vital to have records of all your transactions. In order to offset your expenses against your profits, you must be able to prove that those expenses are wholly, exclusively and necessarily incurred in relation to your business. For those who are VAT registered, it is necessary to keep VAT receipts so that you can reclaim the VAT element of the transaction.
4) Use bank statements regularly to check your accounts
In order to consolidate your bookkeeping and ensure you are recording every transaction made, as well as to ensure that the bank has not made an error in your accounts, check your bank statement against your own records at least once a month. To do this effectively you will need to take the previous bank balance, add on any payments you have received and deduct any you have made, and ensure that the result is the same as the current bank balance. If there are errors then make sure to follow up on them.
5) Carefully consider the best way to record your transactions
For really straightforward bookkeeping, you can use a specialised online bookkeeping software. There are many to choose from, at all varying prices and with different benefits, but most require a certain level of knowledge about accounting. However, there are some simpler bookkeeping software packages out there.