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Self Assessment Tax Returns With HMRC

I have been self-employed for 3 years now. I have filled out 2 self assessment tax returns with the HMRC, and I have another due to be filled in the next few weeks. My experience with the self assessment tax returns with HMRC has been good. I found my first experience a lot more scary than the second. Which is perfectly understandable as that was my very first time submitting my tax returns. But since then, it has been great.

HMRC website is user-friendly and pretty self-explanatory. I found the filling out of the tax returns quite straight forward for me. But that may be because I have a degree in Accounting, and I am married to a qualified accountant. So whenever I get stuck, he comes to the rescue. It could also be because of great online resources like Talk Tax. For those who have never heard of Talk Tax before, it is a great website set up in 2014, that provides hard to reach HMRC contact numbers and articles to inform readers about policy change/benefits/ self-assessment and more.

 

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When it comes to getting important things sorted, like my tax returns, I don’t play. I take it very seriously. I believe in being proactive and not reactive when it comes to tax business. And that has helped me stay on top of my business.

These 2 tips for filling out your self assessment tax returns have come in handy for me, and they may work for you too.

 

Start Early

This is the first and most important tip when it comes to filling out your tax returns. You need to be an early bird, and start early. So when the window opens in April, you get it submitted before the summer months. That way you have the time to spread your tax and national insurance payments (if any). Starting early also means you will have the time to take your time filling out your tax returns properly.

When you leave it all until the last-minute, you start to panic so you rush, and you are more likely to make mistakes. You may also have to go into debt to pay your tax bill if you are not prepared. January 31st is the cut of date for self-employed self assessment tax returns, and many people struggle to pay up their bill before the end of January since most of the money has been spent on the Christmas shopping. Plus January is usually a quite month for most businesses. Which is why I like to get mine done long before then. Don’t leave your tax returns until the last-minute.

 

Keep Records

Starting early would work great if you keep records. Ensure you have a spreadsheet for every invoice you send and for any money I spend or receive. Having records will ensure you fill out your tax returns with the right figures quickly. It makes the process a lot easier.

The last thing you want is to fill out wrong information on your tax returns. That would land you in trouble quickly with the HMRC. Having up to date records means you won’t have to guess any figures.

 

Many people are usually frightened when it comes to anything tax related and I understand why It is because they are not well equipped and usually not informed. There are loads of information around to help you submit your tax returns yourself and if you are unable to do so, you can always hire someone else to sort it out for you.

Remember, if  you don’t complete a Self Assessment return for each tax year before the deadline, you will get a penalty fine. This penalty starts at £100 for delays of up to 3 months but will increase the later you leave it. HMRC may also charge you interest on late payments. So ensure you get your tax returns in before the deadline.

 

How do you find the process of submitting your tax returns? Easy or complicated?

 

*Collaborative post.

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Amending Mistakes on your Tax Returns

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I wrote a post about filing your tax returns as a freelancer some months ago, and it was well received. So this post is really just a follow-up post, to answer some questions that were asked in the comments and via email.

I set up this blog – Fashion and Style Police in October 2012. And then I knew little or nothing about how bloggers make money. I just wanted an outlet to write. So filing a tax return or registering as self-employed was the last thing As the blog grew, I started getting sponsored posts requests (I wrote all about these in my book, check link directly above) and then I started to think about best ways to send out invoices, registering myself as self-employed and filing the ‘Almighty’ tax returns.

The number question that was asked by many bloggers and freelancers is – “What to do when you have made a mistake filing out your tax return“, followed closely by “How best to keep track of your finances” and “To employ an accountant or not to employ an accountant”.

Here are 3 tips you should answer these questions:

 

Submit your Tax Returns Early

Submitting your tax returns is the first step in getting the process right because you are more likely to complete your tax return without errors when you submit it early. Panic, rush and anxiety usually leads to mistakes. I like to submit my tax returns by May/June (tax year ends April) after the tax year-end even if I have till January. I like to sort out important stuff quickly. And plus if I do make a mistake on my tax returns, I have 12 months to amend it on the HMRC website. So it is better to submit early just incase there are any errors.

 

Check and Check Again

I check my tax returns multiple times before submitting, just incase I missed an error or not included a vital information. I usually get a fresh pair of eyes to check with me as well. It is better to be safe than sorry.

 

Speak with an Accountant

If you are not on top of your finances, to busy to deal with your tax returns or you rather just employ a professional, then speak to an accountant. Sometimes it is best to let the professionals do the work they are trained to do. If you don’t have a budget for an accountant or you are not earning much from your self-employed career, then you may attempt to file your tax returns yourself. I did, and trust me, it is not as difficult as it appears to be. It is quite straight forward, and there are loads of information on the HMRC to guide you. You can aslo call the HMRC office if you need clarification on any tax related issue. The best times to call are Tuesday to Thursday, between 8.30am – 10am, 11.30am – 1pm and 2pm-4pm, but lines are usually open at at 8am Monday – Friday.

 

Do you struggle with filing your tax returns?

 

*This is a collaborative post.

 

 

 

5 Tips for Filing your Tax Returns as a Blogger

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I am no accountant, ok I lied, I am actually an accountant. I studied accounting as my first degree. Although, I am no longer practising, I still remember a thing or 2 from back in the day, so when it came to filing in my tax returns as a blogger, for the first time last week, I found it a walk in the park. Well almost a walk in the park. My tips here can set you up on the right path when it comes to filing in your tax returns, but do get financial advice from the professionals if you feel you need to.

We all know we should declare any income we make from our blog, but many bloggers find it the whole tax returns a bit intimidating and rush off to hire an accountant. Well, unless you are making a crazy amount of money from your blog, or have the most confusing set of expenses, filing in your tax returns should be fairly straight forward.

Here are some tips to help make the tax returns process a lot easier:

 

Register as Self Employed/Limited Company

If you make as little as a £1 from your blog, you need to register as self-employed with HMRC. You are breaking the law if you do not, and you can be fined so get registered ASAP if you have not done so already. You can register as a self-employed person or a limited company with HMRC, it all depends on how you view your business. There are pros and cons to both options, so it is best to evaluate your circumstances before you decide on what route to take. However, It is easier and cheaper to start off as self-employed as you don’t have to deal with the costs of forming your limited company, costs which includes setting up a company bank account, and registering your company for PAYE and VAT number (this is different from the Unique Tax Reference number you do get when you register as self-employed, that is free), which could as much as £125, and you SHOULD appoint an accountant to oversee the company’s finances.

As for self-employed, you won’t have to do any of the above. All you have to is to register and file in your tax returns, which you can do yourself. The beauty about registering as a self-employed person is that you could always switch to a limited company in future, when your brand grows and when you see yourself earning more than £25,000 a year, as registering as a limited company will be the most efficient way of managing your tax.

 

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Spreadsheets

You should have spreadsheets where you take note of every income you make, and every expense. It is best to categorise these into different months, so every month, you should update the spreadsheets with every income you made, and every expense. This way you will have a clear picture of how much gross and net profit you have made every month. Believe me when I say if you get this bit right, filing your tax returns will be very straight forward, and this just not only help with the returns, it also tells you how you are doing financially every month, which is a great motivation booster.

 

Invoice Your Clients

I do blogger outreach for a few clients and I find it alarming that I need to remind blogger to send in invoices to get paid. Most of them just send in their Paypal email addresses alone and I wonder how they plan to track all incoming payments. Going through the Paypal statements for the entire tax year to track payments is definitely not a good idea. If you are only receiving few pennies here and there, you may get away with not sending your client invoices for payments, but once you start making a good amount of money, not sending your clients invoices correctly and in a timely manner may cost you.

 

Submit your Tax Returns Early

I know we have until end of January to submit our tax returns but it is best to get it over and done with as soon as possible, and get ready for the next tax year. So submit your tax returns as soon as you can, so you have the time to sort out NI and tax payments if any. I won’t leave it till the last minute.

 

Fill Out Your Tax Returns Correctly

This goes without saying but it still needs to be said. Make sure you answer every question honestly, as best as you can. There is a lot of information on the HMRC website and you can always give them a call to clarify anything you are unsure of. Also remember to keep all receipts and invoices incase you need to refer to them in future.

 

These are few tips to help you fill out your tax return. I hope you find them useful. Do you have any tips to share? Drop me a comment, lets chat.

 

 

 

 

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