What you need to know about taxes as a new business owner
So, you’re new to the world of business and you’ve just had a rude introduction to a world dominated by HMRC. How much of this tax business do you need to know? You might hope we’ll tell you, “you don’t need to know anything as long as you have the help of a great accountant!” But we won’t.
Even with the best software and accountant your money can buy, you’ll still need a basic understanding of how your taxes work to protect your livelihood in the future.
What you need to know to get started
Understanding the minute details of how accounting works isn’t necessary for you as a small business owner. You likely have more pressing matters to attend to, like arguing with suppliers and explaining to people exactly why you won’t work for them for free.
But to free up your time to do these important things, you’ll need to invest in the right software to automate a lot of the accounting process. And if your needs exceed that of what you can do yourself, you’ll need an accountant. Having both will make your business more efficient, ultimately saving you time and money.
Hiring an accountant
A great accountant will have the following factors:
- A strong reputation
- No history of costly mistakes
- Value for money
- Excellent, frequent communication way before deadlines
- They can easily answer all of your questions
You’ll have to do a little research into your prospective choices to ensure they have at least these basic qualities. You can look at online reviews and testimonials, speak to past clients, and approach the accountant with questions you have to help inform your decision.
Choosing the right software
When deciding which accountancy software is best for you, you must consider:
- Your needs as a small business
- If it works with the cloud to update and back-up information automatically across devices
- Your budget
- Will it allow your business to grow and expand or will you need to purchase new software in the future?
- What processes it streamlines
There are plenty of options to choose from, but some will fit your business better than others.
You need enough accounting knowledge to protect yourself from legal troubles. Any huge penalties could result in you having to dip into your own pockets to pay HMRC. This isn’t an uncommon scenario. Some business owners have to sacrifice things like family holidays and time spent with children to sort out accounting messes.
Accountants rarely make mistakes, but there is still a small chance they could. Most of the time, you’ll be liable for any errors. And accounting software only works properly when the person using it knows what they’re doing. So, to protect yourself, you’ll need to know:
- Your tax return deadlines – Sometimes accountant won’t notify you in due time, so being aware of key dates gives you time to prepare to pay your tax bill. This Halloween in 2019, over a quarter (27%) of SMEs missed the tax deadline.
- How your accounting software works – There is no point in having it if you don’t know how to use it.
- The type of tax you should pay and for who – This varies between different businesses.
- What you can claim on your expenses – Make sure you don’t use it for anything personal.
Aside from these fundamentals, your accountant and software should cover the more detailed aspects of what makes up successful accounting in your small business. That way, you know what’s going on and what should happen but you don’t have to do the hard work. You’re free to focus on your goals.
Big Hand offers reliable and trustworthy accounting services so you can focus on the things that really matter. We can help you make positive changes and decisions with the help of our business advice services too. Just get in touch on 0161 327 2911.