The January bookkeeping blues are looming, as small business owners across the UK are crunching the numbers and getting their books in shape to submit tax returns by January 31. This is the deadline for online submission of Self Assessment tax returns. Those New Years Eve revellers who don’t meet the deadline could be slammed with a fixed fine from HM Revenue & Customs (HMRC), of £100, for being just one day late. Diana Flier, senior compliance analyst, Intuit UK, examines the risks.
If you’re going to be stuck indoors, with your head in a ledger on New Year’s Eve and starting to feel the blues yourself, you’ll not want to be in this position next year. Make bookkeeping your New Year’s resolution and follow these simple steps to take the pain away:
Get a head start with your accounts. HMRC states, “you must keep records of all your business transactions”. There are key dates and deadlines that small businesses need to be aware of throughout the year. Pop these deadlines in your calendar now so that they don’t come as a surprise.
Make bookkeeping a priority for your business. According to a recent Intuit report entitled The Three
While financial management typically falls fairly low on a small business owner’s agenda, it is more than just a HMRC-satisfying exercise – it can make or break your business.
Year Glitch, one in 10 businesses which had been operating for less than five years ran out of cash and, staggeringly, more than one in five small businesses still rely on pen and paper accounting. While financial management typically falls fairly low on a small business owner’s agenda, it is more than just a HMRC-satisfying exercise – it can make or break your business. Keeping up good book-keeping habits is crucial to running a successful business.
Let accounting software do the hard work for you. As well as allocating time each week to review and update the books, small business owners should consider using accounting software. In today’s fast-paced and mobile world why not opt for a cloud based solution such as QuickBooks Online. Not only can you access your books from any Mac or PC, and even your mobile phone, your accountant can too.
You still have time to make this January’s deadline - here’s what you need to know:
1. You have already missed the October 31st deadline for submitting your tax return by post, you must instead submit your tax return online by January 31st 2012.
2. Your online tax return must reach HMRC by midnight on January 31, 2012 – without fail If you haven't sent an online tax return before, you need to register for HMRC Online Services by January 21. This will allow HMRC time to send your Activation Code. You can register here for Self Assessment, or get in touch with HRMC for any further advice or help.
3. If you’re unsure if you need to complete a tax return, it’s worth contacting HRMC to check. However, if you have relatively straightforward tax affairs and already pay tax through PAYE (Pay As You Earn) you probably won't need to complete a tax return. But if you have more complicated tax affairs – or income from several sources – you may need to complete one.
4. The penalties for late returns are pretty steep and the longer you delay, the more you'll have to pay:
- 1 day late: A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
- 3 months late: £10 for each following day – up to 90 days, maximum £900. This is as well as the fixed penalty above.
- 6 months late: £300, or 5 percent of the tax due, whichever is the higher. This is as well as the penalties above.
- 12 months late: £300, or 5 percent of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100 percent of the tax due instead. These are as well as the penalties above.
5. When you’re all set, you can file your tax return online here.
So, while your book-keeping blues may seem here to stay and the month ahead looks bleak, you can make things a lot easier when it comes to 2013’s January tax return deadline. Be resolute, start early and move your books onto an accounting software package. Remember, you’re not just doing this for HMRC – it will be better for your business in the long (and short) term.