Business
4 Tips for Startups Filing Taxes for the First Time
Filing your taxes is an inevitable part of functioning in the UK as a startup. The first year is always the hardest because you’re new to the system and you might not be sure what you’re doing. This guide is going to give you some tips on what you need to do to make sure you file your taxes successfully.
Hire the Right Accountant
Hiring an accountant or a bookkeeper is an important part of filing your taxes. But whilst other guides suggest hiring an account we suggest hiring the right accountant. Don’t assume every accountant can help you out. Although first year taxes for a startup are relatively simple to manage, you should always go with an accountant who has experience dealing with people in your situation.
Look for an accountant with experience in managing startup taxes. Also, remember that they should know how to file for your company type. Filing for a sole partnership is slightly different to filing as a limited company.
Opt for Tax Compliance but Be Careful
Tax compliance means you pay your taxes to HMRC and not a penny more. It’s perfectly legal and acceptable to do. But you need to make sure you’re not accidentally straying into tax evasion territory and inviting an inspection from a tax inspector.
Again, this is why we recommend hiring an accountant. Go over your expenses with a professional and see what you can legally deduct from your tax bill. If you’ve already filed, you should look to tax refund services to help you with getting that money back.
Remember the Different Deadlines
There are different deadlines based on how you want to file. For the self-employed wanting to submit by paper they must make sure they submit by the 31st of October following the tax year they’re filing for. We recommend against this because you essentially must submit two to three months in advance.
Use HMRC’s online portal and you only must submit and pay the amount of tax you owe by the 31st of January.
Take note that limited companies do things differently. For them they define the end of the financial year when they start their company, and this can be changed later. Corporation tax is paid based on when your financial year ends, so make sure you get some professional help to enable you to manage this better.
Make Sure You Have a Bookkeeping Solution Throughout the Year
One of the biggest mistakes startups make when it comes to filing tax is they must go through all their documents within a few weeks to figure out what they owe. This is a mistake because it means that they must set aside a lot of unnecessary time and effort.
Spread this out throughout the year. Employ a bookkeeper, whether in-house or remotely, to keep an accurate record of your income, expenses, and profit. That way you can find the numbers you need at a glance, making doing your taxes hassle-free.
Conclusion – After Tax
There’s a long and comprehensive list of the documents you need to keep in case HMRC wants to inspect you. The longest of these documents is six years. Keep these in a secure location and ensure you have easy access to them. It’s unlikely you’ll need them, but you’re required by law to make them available if requested.
Following these tips should make it easy for you to file your taxes for your startup in your first year, and avoid any unnecessary run-ins with the UK tax authorities.
Have you ever filed taxes with HMRC before?
Author:
Victoria Heckstall is a professional writer that specializes in marketing and startup topics. Check out more of her writing on her website.
