It’s likely that managing your own finances isn’t the most exciting aspect of your job as a freelancer. If you haven’t paid as much attention to your tax planning in 2015 as you should have, what better time start than the new tax year?
The idea of having to catch up on six months’ worth of expenses can be overwhelming for even the most financially savvy of freelancers. To avoid having to wade through a mountain of paperwork and receipts, track and record your expenses as you go. There are a number of apps that allow you to do this on the go.
Apart from saving you hours in the long term, tracking as you go helps you to ensure that no business expense goes unclaimed – possibly saving you hundreds of Pounds at the end of tax season.
While keeping physical receipts might give you peace of mind, creating a digital record of your expenses is an easy way to keep track of your business spending.
When creating a digital system, be sure to organise your receipts in an intuitive way. Save your scanned copies or images with specific file numbers, including the date and type of expense, for example: 2016-04-07 FUEL. Having a filing system that will make sense to you in a year’s time will make searching your records much easier.
Don’t have a scanner? No problem. A quick browse on your smartphone’s app store will bring up a host of useful scanning apps, many of which will enhance the quality of pictures taken with your phone.
Even with the best intentions, you may find yourself falling a week or two behind on your filing. If this happens, try and set aside a few minutes a day to catch up on recording your receipts and get back on track. The sooner you do this, the less time you’ll spend on admin – freeing up valuable billable hours.
Know what you can claim for
It can be difficult knowing what you can and can’t claim for, as there’s no fixed list of expenses for freelancers to work from. Effectively, if you purchase something you will use to run your business, it’s an expense. If you’re still unsure, we recommend chatting to an accountant.
Don’t wait until the last minute to file your tax return
Over 4.5 million people in the UK are self-employed. Last year, a million of them filed their tax returns on the very last day of the period. Another 890,000 missed the deadline completely, resulting in a £100 fine – a completely avoidable expense.
Unsure if you need to file a tax return? Get more information on this, here.