The FreeAgent Blog
We know that January can be a tough month for small businesses, particularly with a Self Assessment tax bill to pay at the end of it, so last month we entered all our subscribed customers into a prize draw to win £2,000. The lucky winner is freelance photographer, Andy Barnham. Here Andy tells us about his work and how he uses FreeAgent to help him run his business.
“I started photography in 2009 after leaving a seven-year career in the British Army. The odd shot quickly turned into blog and magazine work and within two years I found myself photographing runway shows during fashion weeks in London, Milan and Paris, editorial fashion shoots, portraits and hand crafted luxury goods (to name a few). My work tends to focus on menswear and tailoring, but I've been lucky to photograph a wide range of topics and meet interesting and inspiring people; photographing Dr Condoleezza Rice and Stevie Wonder have been standout moments.
“I started using FreeAgent two years ago. Having started my business from scratch, all my working habits had grown organically and while they were adequate in the short term, they were not ideal for the longer haul. I had been using various spreadsheets to keep track of my business and had looked at various photographer-orientated software packages, but none of them were as intuitive as I would have liked. It was while talking to a tech friend that he mentioned FreeAgent, amongst other packages, and I took a look. It’s not specifically tailored to my industry but it does everything I need it to do.
“On a day-to-day basis I use FreeAgent to keep track of my expenses and my invoices. I find that unless I account for my day-to-day expenses promptly, I forget about them - never a good thing as the odd purchase adds up! FreeAgent’s invoicing functionality helps me keep track of who has paid and who hasn't. As a small business it is important to keep the cash flow going as I never know where or when the next job is going to be.
“When it comes to running my business, FreeAgent is a great tool for helping me keep track of the little things. I find that bigger issues tend to look after themselves and are important enough for me to remember; it’s the little things that are easy to overlook. FreeAgent helps me keep track of them and ensure I take appropriate action before they have a chance to escalate and become bigger problems or even emergencies.”
If you’re one of the millions of small business owners who has to file a Self Assessment tax return by 31st January and you haven’t made a start on it yet, you may be feeling anxious about meeting the filing deadline. Time may be tight, but you have until midnight at the end of Sunday 31st January, so roll your sleeves up, take a deep breath and make a start. Here are some top tips to help you on your way:
Double-check which expenses you can claim
You might be working to a tight deadline, but try to resist the temptation to dive straight into your Self Assessment in a blind panic. Before you start categorising your transactions, it’s worth getting up to speed with the rules surrounding business expenses and what you can (and can’t) claim - especially with regard to travel, accommodation, food and drink, entertaining, clothing and the business use of your home. You can do this by checking your proposed expenses against the info on HMRC’s website or our A-Z of business expenses checklist.
Gather your paperwork
You probably know that it’s a good idea to pull your paperwork for the 2014/15 tax year together before you begin completing your Self Assessment tax return. Not sure where to start? Here are the documents and information you should dig out as a priority:
- your P60
- interest from your bank account
- your business’s income and expenses (if you are a sole trader or in a partnership)
- the value of any dividends you’ve received on shares that you own
Remember that you’re looking for documents and information relating to the 2014/15 year, which ran from 6th April 2014-5th April 2015.
Take it one step at a time
The filing deadline might be looming, but try not to rush your tax return as you may be more likely to make a mistake. Tackle one section at a time and read all the instructions carefully. If you haven’t done so already, download our step-by-step checklist, which talks you through each stage of the process and provides lots of additional hints and tips to help you complete each section of the Self Assessment form.
Make sure you leave plenty of time to thoroughly double-check everything before you submit your completed tax return to HMRC. If you don’t feel 100% confident, it may be a good idea to speak to a qualified accountant who will be able to check it for errors.
Submit your tax return in time - and don’t forget to pay your tax bill!
Completing your Self Assessment tax return before the deadline is a great feeling, but don’t celebrate too early! Remember that you still have to file the form before midnight on the night of 31st January 2016, otherwise HMRC will issue an automatic fine of £100 - even if you’re just a day late.
Remember that you also have to pay your tax bill by midnight on 31st January. In last week’s blog post we looked at the different payment methods that are available and how long each payment method takes to process. Bear in mind that 31st January falls on a Sunday this year, so you may need to build in extra time for your payment to reach HMRC.
If you find yourself struggling to complete your tax return on time, don’t do a poor, rushed job just to get it submitted. If you miss the deadline, the worst that can happen in the first instance is that HMRC will fine you £100 for failing to file on time and you’ll also be charged interest if you pay your tax bill late. You won’t automatically get a visit from a tax inspector or face immediate prosecution by the authorities and you can still submit your tax return after the deadline has passed.
However, be careful not to get lulled into a false sense of security. HMRC starts increasing the penalties for late filing if you leave it too long, and there are also additional charges and interest to pay when it comes to paying your tax bill late. Dawdle too long and those penalties will quickly start to add up!
Sunday 31st January is right around the corner and if you’re a small business owner or freelancer who has to submit a tax return this year, you’ll know that this is the date by which you have to submit your Self Assessment for the 2014/15 tax year to HMRC.
It’s also the date by which you have to pay your tax bill - and with the 31st January falling on a non-banking day this year, it’s more important than ever to get organised and make sure that your payment reaches HMRC on time.
Here’s a handy rundown of the main payment options that HMRC accepts, how long each type of payment takes to process and how you can use each payment method.
|Payment type||How long it takes for the payment to reach HMRC||How you can pay|
|Online or telephone banking (Faster Payments)||Same or next day, including weekends and public holidays||By using the bank details listed on gov.uk|
|CHAPS||Usually the same working day (if you pay within your bank’s processing times)||By using the bank details listed on gov.uk|
|Bacs||Three working days||By using the bank details listed on gov.uk|
|Debit card||Three working days||By following the links from your HMRC online account.|
|Credit card (1.5% charge)||Three working days||By following the links from your HMRC online account.|
|Cheque through the post||Three working days||By writing a cheque made payable to ‘HM Revenue and Customs only’ followed by your Unique Taxpayer Reference (UTR) number. It should be posted along with your paying-in slip to HMRC, Direct, BX5 5BD – no street name, city name or PO Box is required..|
|Existing Direct Debit||Three working days||By setting up a Direct Debit from your HMRC online account. (Note that you have to set up a new direct debit every time you wish to make a payment).|
|New Direct Debit||Five working days||By setting up a Direct Debit from your HMRC online account.|
|At the Post Office (only an option if you get paper statements from HMRC and have a paying-in slip which they sent you).||Same day (Monday-Friday only)||By paying a maximum of £10,000 by debit card, cash or cheque made payable to ‘Post Office Ltd’.|
|At your bank or building society (only an option if you still get paper statements from HMRC and have the paying-in slip they sent to you in the post)||Same day (Monday-Friday only)||By paying cash or writing a cheque made payable to ‘HM Revenue and Customs only’ followed by your Unique Taxpayer Reference (UTR) followed by the letter ‘K’.|
Note: For payments where a reference is required you will need to use your 10-digit Unique Taxpayer Reference (UTR). Where a payment reference number is asked for you should use your UTR followed by the letter ‘K’.
As you can see, the majority of the payment methods only apply on banking days (i.e. Monday to Friday), and many of these methods take a few working days for your payment to reach HMRC. You can find out more on gov.uk.
Whichever method you plan to use to pay your tax bill this year, make sure you file your Self Assessment with HMRC in enough time to allow your payment to reach them before the 31st January deadline. Otherwise you will have to pay interest and may even face a penalty, even if you manage to file your tax return on time.
Need some support?
If you still need to prepare and file your 2014/15 Self Assessment tax return and would like some additional support, why not download our step-by-step guide for preparing and filing your 2014/15 tax return? It talks you through each stage of the process and provides lots of additional hints and tips to help you complete each section of the Self Assessment form.
The app has been designed to let you take care of business when you’re on the move or have a couple of minutes to spare. With FreeAgent Mobile you can:
- record expenses and capture photos of receipts
- create and send invoices in seconds
- view and explain bank statements
- see a handy list of your contacts and suppliers
The app is free for all our customers so if you’re an Android user, head to the Play Store and get FreeAgent Mobile for Android now!
Take a look at the FreeAgent Mobile FAQs if you have any questions.
If you don’t have a FreeAgent account you can still try it out for free! Simply start a 30-day free trial and then head over to the Play Store and install FreeAgent Mobile.
Until next time,
Roan and the team at FreeAgent
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