Filling out a self-assessment can be tricky. Going through your first one without an accountant may mean making one or two mistakes – but you can avoid the most common ones by reading through this quick overview of the top self-assessment mistakes made by solopreneurs.
Missing the deadline
Yes, it’s the most obvious mistake you can make, but missing the deadline is still something hundreds of thousands of people do each year. The number for 2015 was estimated at around 890,000.
Those 890,000 will have had to pay the initial £100 fine by failing to return either their paper tax return by 31 October or their online return by 31 January.
£100 isn’t a monumental sum, but the penalties you have to pay will increase the longer you delay. Perhaps most importantly, failing to get your self-assessment in on time suggests your business lacks structure – there’s no good reason not to get this done on time.
A dangerous blurring of the work/life divide occurs when you mix your personal finances with your business finances.
As a solopreneur, the money you make from your business will be your income. You need to make sure there is a strict division between money spent on yourself and money spent on business.
Make sure you have a separate business account that all money goes into. You don’t necessarily need one, but it can be incredibly tedious to pick through your payments to identify every business transaction – it’s much more convenient to use one.
Not disclosing supplementary income
Some additional income isn’t covered by the main tax return, but it does need to be included in the supplementary pages.
Examples of such income sources include income from share schemes, lump sums, tax reliefs not included in the main part of your tax return, and any income from property. These will all affect how much tax you need to pay and should be included in the return.
Failing to claim expenses
If you needed to buy something for your business out of your own pocket, you can still add the purchase to your business account to reduce the amount of tax you pay.
Anything you use for your business – from laptops to notepads – can be claimed as an expense. It might not seem like it, but the amount you save by claiming back the tax can really add up.
People seem particularly willing to forfeit claims that are a little trickier to work out, such as the miles your car eats up for business or a proportion of your home’s running costs. However, an accountant can help you claim tax relief on those costs.
We can help you avoid these self-assessment mistakes made by solopreneurs
To find out more about how we can help you get the most out of your self-assessment, get in touch with us today.