Getting ready for self-assessment

The January deadline for annual self-assessment tax returns is fast approaching, so the conscientious small business owner should be doing the prep work required to help complete the paperwork. One of the major sticking points you face when preparing the return is going to be the area of business expenses.

Because you can only claim relief on true business expenditure, it is essential that you keep decent records of every transaction. You need to have enough information so that in the event of an audit or query, there is enough evidence to prove that each claim is indeed a true business expense.

Current tax laws actually make this a legal requirement – you must keep records that specify and explain all business transactions. This also includes copies of all documents that you need to work out your tax liabilities. If you don’t have this information ready for your tax return, then it will be no surprise when your accountant moans at you.

At year end your accountant will want to see proof for all of your business expenditure so that it can be properly recorded and calculated. With the correct information your accountant can define what can be deducted as an expense, what needs to be depreciated and what where you may be making erroneous expenses claims.

And rather than trying to collect all this information together once a year, it is far better to use an accounts system that can capture this information every time you make an expenditure. For more information about such a system, speak to your accountant.