Wow, another tax year over, where is time going?
How did you do this year? Do you know yet?
Have you completed your end of year accounts or are all your receipts/invoices and bits of paper still in a box under your desk staring at you.
It’s so tempting to leave it until the last minute as bookkeeping doesn’t make you any money (unless you’re a bookkeeper!).
How would you feel if there was an easier and less stressful way of completing your self assessment?
Would you give it a go?
Or would you still stick to your routine of doing the bookkeeping in your Christmas Break because that’s when there are no customers?
I thought rather than give you a great big long list of everything that needs to be done, I’d tell you a story of how many sole traders tackle their accounts throught the year (fictitious of course).
Are you ready?
Joe Blogs is a painter/decorator who spends half his life up and down ladders and his clothes are invariably covered in emulsion. His days are long and he is tired at the end of the day and wants to spend time with his family - the whole reason he works so hard.
Joe has a duplicate invoice book and writes his invoice at the end of a job and gives it to his customer - I’ll be back in a week to pick up payment.
Well a week goes by and he’s in a different part of town so he thinks he will call round next week instead.
Joe has to call at the paint merchants to pick up paint for his next customer and he scrunches his receipt into his glove compartment. This goes on throughout the year and then he realises he has to take all of his receipts and invoices to the bookkeeper/accountant who is now going to charge him to sort out his self assessment.
Joe also uses his personal bank account (you know the one, it has all the food shopping, Christmas presents, his wife’s salary in) and doesn’t take time to highlight all his business transactions.
Joe doesn’t know how much profit he has earned this year because he hasn’t kept any records, he’s also had a very good year - but doesn’t think he will have earned enough for VAT registration, but he's not sure.
Joe is still very busy and so doesn’t have chance to pull all his paperwork together until December when he is absolutely worn out and can’t remember the last time he had a break from work, because customers want a lovely decorated house for those Christmas parties.
Eventually Joe gets a carrier bag and throws his duplicate invoice books in and goes round the van, house, bedside drawer searching for all those receipts that he has had throughout the previous tax year and takes them to the bookkeeper/accountant who has to put together a jigsaw of his accounts in order to reach a figure for his self assessment.
Can you imagine the number of hours that this is going to take to sort out and the cost that will go with it?
Joe is not going to be a very happy man when his bill comes through.
Case Study 2 -
The New Way
Joe has just been to the bookkeepers/accountants office and the bill is huge and the bookkeeper has told him that he could save himself a lot of money by either being more organised or using one of the new software apps available that can be used on your phone and that they will help him to set it up so that all he has to do is create the invoice on the phone with a few simple taps and email it to the customer with a Pay Now button that will go through Paypal/Stripe etc and put the money into a new business bank account.
Then when he goes to the paint merchant, he can snap a photograph in the app on his phone and it won’t matter if he loses the receipt as the app will store it and attach it to the expense in his accounts. Some of the self employed apps have built in mileage trackers which enter the mileage into the expenses, saving even more time for Joe to spend with his family. At the end of each month or even each day if Joe wants, he can look at his app and see how much profit he has made and how much he is going to owe the taxman and if he needs to be thinking about registering for VAT. His bookkeeper/accountant will also have access and can review his accounts on a monthly basis and suggest ways in which Joe could save even more money.
At the end of the tax year Joe will know how much he needs to pay the taxman for his self assessment and will be able to ask his bookkeeper/accountant to submit his Self Assessment or even submit it himself through his app. His bookkeeper/accountant is always on hand to support him through this process, but his bill is drastically reduced and he can even afford to take the family out for a celebration meal or even a short break.