Good Accounting Habits To Begin At The Start Of A New Tax Year
The end of the financial year can be a stressful time for anyone filing their taxes. However, once you’re through the blind panic and submit your tax return (minutes before the 5th of April deadline), it’s usually time to breathe a big sigh of relief.
You tell yourself that next year you’ll be more organised and it won’t be a monumental task again. Of course you will. But, here are some good accounting habits to begin at the start of the tax year to help make 2024's tax return headache-free.
Regular housekeeping
One of the best ways to make the huge end-of-year financial challenge easier is to break it up into smaller tasks.
Rather than trying to remember and document your transactions weeks or months later, begin writing everything down as it happens. While this might add a few additional seconds to the task at hand, when it comes to filing your taxes this practice could save you hours.
Your records can be as simple as:
- The amount you spent
- The date it was paid
- What it was for
Furthermore, documenting as you go avoids the risk of missing key information that could see you penalised by HMRC for inaccuracy.
Planning with an accountant
If you know that you’re probably going to fall back into bad habits then the ultimate way to protect yourself from this headache is to make it someone else’s. Partnering with an accountant will save you a lot of time and they can also help you to find tax loopholes that can also help you save.
For example, experts at Hamylns Chartered Accountants point out, “Many businesses are unaware that they may be entitled to claim tax relief against a proportion of the purchase consideration of a commercial property”. Additionally, hiring an accountant will give you the peace of mind that you are fully compliant and there will be no issues with your tax returns.
Chase your invoices regularly
As a small business owner, it can be easy to fall into the habit of waiting months to get paid by some of your clients. While you can be confident that everything will work out in the end, failure to get your invoice wrapped up by the deadline can cause inaccuracies.
As you enter the new tax year, set yourself a goal to not let unpaid invoices occur and aim to get into the rhythm of chasing late invoices by creating an effective system.
As a habit we recommend a system such as this:
- Creating a monthly list of all billable work
- Populating and sending those invoices to your clients
- Waiting a defined period for the invoices to be returned, e.g., two weeks or one month
- Check back in and identify which invoices are overdue
- Chase the invoices
- Check once again at your next monthly list creation
By creating a system not only will you avoid any unpaid invoices slipping through the cracks but your clients will get into the habit of repayment and be less likely to always be late.