5 tax mistakes to avoid
Doing your tax can seem scary, but with the right tools it can be simple. We take you through common tax mistakes and how to avoid them.
Leaving it to the last minute
When you leave your tax returns to the last minute it can get stressful. Searching for receipts, gathering information and either sending it to your accountant or doing it yourself can take up a lot of your time.
If you do your accounting regularly and get a good routine, everything will be prepared for when you need to submit your VAT Return. Your submission process will be smooth, and you can get on with running your business.
Not tracking your turnover
It’s important to keep a close eye on your turnover as it can affect which taxes you need to pay. It will be good to know if you’re likely to change band, so you can set money aside to prepare for your payment. You should also know your profit, as it can change your National Insurance contribution amount.
If you earn over £85,000 you will need to pay VAT on goods and services. This also means you will need to be Making Tax Digital compliant.
Forgetting about expenses
Expenses are a key part of submitting your tax return. Claiming on allowable expenses can help you reduce your tax payments, so get to know which ones you can claim on.
The most common allowable expenses are:
- Office costs
- Travel costs
- Staff costs
- Reselling goods
- Legal and financial costs
- Advertising, marketing and entertainment
There are some exceptions depending on each cost, so check out our guide to what you can claim as allowable expenses to find out more.
Ignoring Making Tax Digital
Making Tax Digital can seem like a hassle if you aren’t already using an online accounting software. But, if you earn over £85,000 you need to be compliant as the soft landing period has ended.
An easy way to be compliant is to use a MTD compatible accounting software, so you can submit your VAT Return through a digital link. Bokio accounting software uses your bookkeeping to generate an automated VAT Return, so all you need to do is check it over and submit it.
Doing your accounting manually
When you do your accounting manually without using software, it’s easy to make mistakes. Accounting software is an easy way to have all the information you need in one place, with automatic calculations to make submitting tax returns easier.
Bokio accounting software has integrated bookkeeping, invoicing, and expenses. We have everything you need to help you prepare for your Self Assessment tax return, submit your VAT Return for Making Tax Digital and keep the right financial records. You can invite your accountant to work with you in Bokio, or we can help you find one if you need a helping hand.
Accounting is kept simple with Bokio, so you have more time to spend running your business.