Caroline’s 5 top tips to avoid a surprise tax bill

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1. Use FreeAgent accounting software… and I don’t mean sign up for it and leave it sitting there. I mean really make use of it. You can get FreeAgent for free with a Mettle, NatWest or RBS business bank account. I recommend Mettle, it doesn’t have to be your sole business bank account (I also have Santander and Starling accounts for my business) so you DO NOT NEED TO SWITCH, you can set it up as a new business bank account. Mettle is free and as a perk you get a free FreeAgent licence – saving you money already. I co-host training sessions with FreeAgent 5 times per year (Feb, April, June, Sept and Nov): come along to one, they are also free, you need to sign up and you can either attend live or you will get a recording after the event. Sending invoices, reconciling your bank and keeping expense receipts in FreeAgent are all easy AND if you keep everything up to date in there, the tax timeline will estimate your tax bill in advance… how good is that!?

2. Manage your cash and save for tax! I follow the Profit First cash management method and focusing only on tax for now – top tip – save 15% of all cash received for tax. If you do this, even if you didn’t keep your FreeAgent up to date (although please do do that 🙏🏻), you’ll have enough saved for your tax anyway so it won’t be scary when you get your bill.

3. Get an accountant to help you with all of your year-end finances and tax questions during the year. If you are a client of mine, you will never have a surprise tax bill! We work together throughout the year, not just at tax return time. No questions are silly questions.

4. Get a bookkeeper to help you keep on top of your finances month by month. If you are a client of mine and you’re struggling to keep on top of your books, contact me and one of our fantastic bookkeepers can take this stress away.

5. Be an early bird: file your tax return early. It is due by 31st January but CAN BE FILED any time from 6th April – the day after the tax year end. This means that you will know way ahead of the payment deadline how much you need to pay. So even if you haven’t got enough in your tax pot, you’ve got time to save up.

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