April is right around the corner, and with it comes a new tax year. For freelancers and contractors, the end of the financial year can be incredibly stressful – especially when the final figures aren’t adding up and there are a few receipts you can’t quite make heads or tails of.
One way to make tax time a whole lot easier is by getting into good habits at the turn of a new tax year, and taking some inspiration from the spring cleaning season to freshen up your bookkeeping processes. Here are a few great ways to give your bookkeeping a thorough spring clean.
Spring yourself into the digital age
The UK government has set itself a Making Tax Digital (MTD) target for 2020, which will require people to manage their taxes entirely online – much in the same way as a bank account.
If you haven’t gone digital with your bookkeeping and reporting already, there’s no time like the present. It’s easier, safer and more effective to record your income and expenses in digital format, using dedicated software for independent professionals, like FreeAgent.
If you’ve been pencilling everything in on paper for years, it can feel peculiar breaking the mould initially, but it will be worth it in the long run – especially when 2020 rolls around.
Separate your personal and business transactions
Bookkeeping can get messy when personal and business transactions crossover with one another. If you haven’t already, separate the two from one another, and set up a dedicated bank account for your business.
You can then consider synchronising your bank feed with accounts software, which will make tracking figures a breeze.
Play debt collector
Chasing up unpaid invoices can feel like a bit of a chore, but gathering and registering all your income from the past tax year is essential when it comes to providing neat and tidy returns.
As part of your bookkeeping spring clean procedure, don the role of debt collector and pick up all the money that’s owed to you from months gone by. Don’t be afraid to get stern with the more unreliable clients.
Be one step ahead for this time next year
If all of this spring cleaning sounds like a lot of work, why not take the right steps to make sure you don’t have to go through it all again in 2018? Take the time this month to renegotiate new contracts with your clients, so you have everything in writing for the next 365 days; consider writing late payment fees into your terms.
It’s also worth giving your business plan a good polish to ensure your targets are both accurate and achievable for the coming year.
Tax time doesn’t have to be the chaotic chore that everybody makes it out to be. A little spring cleaning will set you on a steady course for the year ahead. Contact Bright Ideas Accountancy today for further advice on how to stay on top of your accounts and bookkeeping.
