Running your own limited company comes with its fair share of responsibility.
From meeting strict legislative deadlines to actually registering the business at Companies House, new business owners soon realise just how much hard work goes into setting up and operating their own company.
As part of your responsibilities, you’ll be doing a significant amount of administration, such as filing accounts, managing invoices and, more importantly, arranging tax payments.
In order to pay your income tax, you’ll need to familiarise yourself with the Self-Assessment system, a form which HMRC uses to collect tax from self-employed workers and limited companies every year.
Failure to complete the form, or a failure to submit it on time, usually results in harsh penalties. However, there’s no need to start panicking just yet, because we’ve got some quick Self-Assessment tips for all the limited company owners out there.
When is the Next Self-Assessment Deadline?
The Self-Assessment deadline is midnight on 31st January 2019. In fact, the deadline always falls on the last day of January, so at least you don’t have to worry about keeping track of different dates every year.
However, this is only the deadline for people filing their tax returns online, and those wanting to submit paper forms needed to have done so by 31st October 2018.
Tip One: Make Sure You Follow the Rules
Paying tax has always involved strict legal obligations and rules, and you’ll want to make sure you aren’t in breach of any of them when completing your Self-Assessment.
Attempting to mislead HMRC can land you in serious hot water, so you need to be incredibly careful with what you’re claiming expenses for and which boxes you’re ticking.
Since filing a tax return can turn into quite a complicated procedure, sometimes these mistakes are entirely accidental. You might forget to include the supplementary pages or miss off a signature, but whether these errors are accidental or not, the result will always be the same: extra attention from HMRC.
Tip Two: Double Check Your Information
Even the slightest error can cause frustrating delays in the process, which could ultimately result in you missing the deadline and being slapped with a fine.
So, instead of leaving your Self-Assessment till the last minute, it’s always a good idea to leave plenty of time to get it double (or even triple) checked.
Ticking an incorrect box, omitting a source of income and submitting incorrect figures are all common mistakes found on tax returns, while some people will even enter an incorrect UTR (Unique Taxpayer’s Reference) if they’re filling out the form in too much of a rush.
These mistakes are bound to result in fines from HMRC, but you could actually be prosecuted if you’re found to have submitted any errors intentionally. In order to reduce the risk of these mistakes, make sure all your paperwork and records are always properly organised, and that you’ve left enough time aside to thoroughly check things over before the deadline.
Additionally, as a business owner, you need to make sure you’re submitting your own income, rather than the income of the company.
One of the perks of owning a limited company is the fact you can take the majority of your income in dividends, allowing you to save on National Insurance costs and potentially keep up to 86% of all your business’ profits.
Tip Three: Avoid Late Filing Penalties
In 2018, 750,000 people missed the Self-Assessment deadline, with each one of them facing a fine of at least £100. If they still hadn’t filed their return 3 months after the deadline, then they’d be fined a further £10 a day.
So, although this might sound like fairly obvious advice to some of you, it’s advice that a quarter of a million people certainly need to heed come next January.
Make sure you’re registered with HMRC to get the information you need and then, as we’ve already said, make sure you leave yourself plenty of time to fill out the form, check it over and then submit it.
Although the deadline isn’t until the end of January, there’s absolutely no reason why you should leave it all right till the last minute.
Tip Four: Consider a Specialist Account
Filing a Self-Assessment form is always a daunting task, regardless of whether you’re a freelancer, contractor or limited company owner. The process can become so convoluted and complex, you should seriously consider hiring a specialist accountant who can ensure you’ve submitted everything correctly.
Not only will they check over your forms and identify any errors, they can also provide invaluable advice on what you can (and can’t) claim expenses for, which records you need to submit and how to pay yourself through dividends.
However, no matter how daunting the whole process might seem right now, it all boils down to remaining incredibly organised.
By leaving plenty of time before the deadline and keeping hold of accurate records, you should feel much more confident in completing your Self-Assessment form correctly– especially now you’ve read our top tips!
Jess has spent years travelling the world full-time. Nothing else comes close to the reaches of this emotive activity...