There are a lot of perks to being self-employed, from flexible hours and being your own boss, to the privilege of working from home in your pants. There are some definitely some drawbacks to freelance life though, and one of these can be the annual filing of the self-assessment tax return.
Unless numbers are your jam, chances are that bookkeeping is not the highlight of your working week. Keeping your accounts in order is vital for the smooth running of a business though, and leaving them to the last minute can be a recipe for disaster. So this year, tackle your books on time, and experience the pure bliss that is filing your tax return early. Emily Coltman FCA, chief accountant to FreeAgent – which provides cloud accounting software for micro-businesses, freelancers and their accountants – has some tips.
1. Money in the bank
If you leave your Self Assessment until just before the January 31st deadline, then you run the risk of receiving an unexpectedly high tax bill, with not enough savings put aside to comfortably pay it. Aside from being out of pocket, you’ll be liable for a £100 fine if you’re even a day late. The earlier you deal with your taxes, the more time you’ll have to budget for them. January can often be a month where the purse strings are especially tight, so do your sanity (and your bank account) a favour, and get that return filed ASAP.
2. All the time in the world
Completing your tax return requires you to get an awful lot of figures, reports and certificates together. Leaving this to the last minute runs the risk of you not being able to find some of these important documents, and potentially having to file late. On top of this, HMRC registration can take up to 10 days to provide you with your UTR confirmation code, so it’s in your interest to get that paperwork ready nice and early. This way, there will be no last minute scrabbling for files, and you can get things done in your own sweet time.
3. The joy of being organised
As the best-selling book by Marie Kondo testifies, there is joy to be found in being utterly and completely organised. If you can tick self-assessment off your list sooner, rather than later, it will be a huge weight off your shoulders. No longer will you spend the year dreading digging out those old documents, as it will be already done and dusted. Along with the feeling of sweet relief, you will now have freedom to fully focus on what’s really important – your business.
4. Freedom to enjoy the festive season
No-one wants taxes to be looming in the back of their mind while they’re tucking into turkey. The annual January 31st deadline for self-assessment submission leaves a lot of freelancers fretting over the Christmas holiday. Get your taxes sorted well before winter, and you’ll be free to focus on much more important things, like eating your body weight in chocolate.
5. Time to find a great accountant (if you don’t have one already)
While you don’t legally require an accountant to help you file your self-assessment, it can often be a good idea to let an accountant check over your work. Although many cloud accounting software systems automatically populates a lot of your tax return for you, by letting a pro take a look you can make sure that you haven’t missed anything out. Accountants are notoriously busy in the run-up to the Self Assessment deadline, so find one you like now, before everyone else books them up.
6. Self-assessment smugness
The final – and most important – reason of all to file your Self Assessment now, is the complete and utter smugness you can radiate from the moment you’ve filed. While your self-employed pals are complaining that they’re going to be bogged down in their books for the next few months, you can hit them with a ‘Self Assessment? Oh, I filed that months ago…’.
Emily Coltman is chief accountant at FreeAgent.