Just finished this year’s tax return? Why not try being a bit more organised when it comes to next year’s?
My accounting system has changed a lot since I first went freelance, mainly in that I actually have a system now. There wasn’t one to start with. What had I bought that year? I didn’t know. I needed to claim for it, I was told. My response was: “Er, what?” In my first year, tax was something I just didn’t understand. Most people who’ve previously done PAYE jobs are used to looking at their payslips every month and wondering where all their money has gone. When you’re accountable for everything yourself, it’s completely different.
My daughter changes over an envelope in my filing cabinet every month and all the receipts for each month go in there, then they go into a spreadsheet. I have previously produced a bin bag full of receipts. It took a week to sort it out and go through everything – not something I’d recommend. I keep all my receipts, but I do have to remember to file them.
I got an accountant involved in the early stages of my freelance career, so that I didn’t leave my tax return until the last minute and get caught out by the need to register beforehand. They’re worth paying for: as with anything financial, it’s best to call in people who are organised and know the industry. If you’re creative and quite heavyweight, you’re going to be busy and you don’t always have time to sort anything else out.
Accountants know how to save you money and make sure that everything is legal. They will do everything in the most efficient way possible. The rules for tax and accounting change all the time, but your accountant will keep up with them – that’s their job.
It’s also a good idea to have separate bank accounts for all work-related matters, so that you have two clean systems. If you’re inspected by HMRC, they will go through everything, so keep on top of your tax all year round.