| the credit crunch hitting hard, business people | | | | accountant simply an annual summary asking just |
| need more than ever to keep a close eye on | | | | for your Self Assessment Tax Return to be |
| their finances. | | | | completed, you will have saved the accountant a |
| There may be no hope for Excel Airways or US | | | | lot of time, and yourself a lot of money. A |
| banking giant Lehman Brothers, but many | | | | time-saving self assessment software can be a |
| struggling small businesses and sole traders could | | | | wise investment. |
| still survive the oncoming recession – all | | | | 3. Claiming Expenses against Tax |
| they need is some good business sense and top | | | | UK tax regulations provide for expense claims to |
| quality bookkeeping. | | | | be allowed for monies spent in the normal course |
| Now that the credit crunch is really digging its | | | | of business. Many people who work from home |
| heels in, there’s no doubt that things are | | | | are self-employed. These two areas give rise to a |
| going to get worse before they get better for | | | | wide range of legitimate expense claims where |
| the majority of British businesspeople. Recent | | | | expenditure previously classed as 'private' now |
| forecasts warn of a winter recession, while a | | | | become 'business' and, as such, will greatly alter |
| survey of British workers revealed that many are | | | | the level of profit and tax payable. However, |
| now experiencing sleepless nights over financial | | | | without a proper set of accounts and records, |
| concerns. | | | | such expenses cannot readily be quantified, and |
| Whilst lack of sleep may not be an effective way | | | | certainly cannot be substantiated if required |
| of safeguarding your livelihood, it is also a very | | | | at a later date. |
| bad idea for business people to ignore the | | | | 4. Getting an Initial Tax Refund |
| problems they are facing. For those who are | | | | Many self-employed people start work on a |
| struggling in the current economic climate, the | | | | part-time basis while still maintaining a full-time job |
| most important thing is to monitor the progress | | | | elsewhere. Almost inevitably this 'day job' will be |
| of their business with effective bookkeeping and | | | | taxed under the rules of PAYE. Often the first |
| to react swiftly to any warning signs. | | | | year or so of self-employment will result in an |
| Here are five reasons why small businesses need | | | | excess of expenditure over income termed a 'tax |
| to put even more emphasis on bookkeeping | | | | loss'. At the end of every tax year, all income is |
| during the recession: | | | | pooled from whatever source and the total tax |
| 1. Monitor and Control Expenses | | | | bill recalculated. By bringing in a tax loss and |
| Now more than ever, it is important to watch the | | | | setting this off against tax already paid, a tax |
| level of expenditure and not to let it get out of | | | | repayment not only pays the accountant's bill, but |
| control. Regular accounting will tell you how your | | | | also is a way of recovering part of the initial |
| expenses are running when compared to your | | | | investment into the business. Remember, |
| targets, and will also allow you to compare | | | | however, without any accounts you cannot |
| monthly income against monthly expenditure. | | | | calculate the 'tax loss', and you will miss out on |
| 2. Save Time and Money | | | | the self employed tax repayment. |
| Talking of levels of expenditure, the cost of an | | | | 5. Borrowing Requirements |
| accountant to prepare your Annual Accounts and | | | | From time to time, and potentially during an |
| Tax Returns is based upon the time it takes to | | | | economic downturn, the need to borrow will arise. |
| do the work. It follows, therefore, that if you can | | | | It may be a new mortgage or money for the |
| reduce the accountant's time by doing much of | | | | business but, in all cases, the lender will want to |
| the work yourself, you will reduce the fee. If you | | | | know the levels of income and profit to support |
| do all the basic bookkeeping and present to an | | | | the loan. No accounts = no evidence = no loan! |