Did you know that 31st Jan is the deadline for submitting the self-employment tax return online and paying your tax bill in the UK?
In this article, we give you tips on how to become more organised with your tax so you can generally focus on what you do best in January.
#1. Educate Yourself on Taxes
Before you can start figuring out what's the most efficient way for you and your business to deal with your tax return, you'll need to have at least a basic understanding of what goes into your books, what you need to include into your income, expenses and so on.
Luckily, the UK Government has a pretty comprehensive guide on theself-assessment tax return, so getting started there is a pretty good idea. They will tell you the deadlines, how you can pay and you can even subscribe to a series of webinars on a variety of topics to help you figure it out yourself. You can also get in touch with an HMRC adviser if you're stuck.
Another great way of learning more about your taxes is by using Google to find articles from reputable expert sources. One thing to keep in mind is to check when the blogs were published and whether or not they were updated recently. Some rules around tax can change every year, for instance, your tax-free allowance, allowable and non-allowable expenses and other details.
#2. Add the Important Dates to Your Calendar
Here's a quick overview of the critical deadlines all self-employed personal trainers need to be aware of to stay on top of their tax.
5th Oct - Newbie fitness professionals who are running their own business need to register for self-assessment by this date in their second tax year. For example, if you started operating after the 6th Apr 2019, you'll need to register before the 5th Oct 2020. If you don't, you can expect a fine.
31st Oct - Paper-based tax returns need to be submitted by midnight on the 31st Oct for the tax year that ended on the 5th Apr the same year. If you aren't using the online self-assessment system, you need to fill the papers and put them in the post, so it arrives by the deadline.
31st Jan - the dreaded date by all self-employed trainers who leave their self-assessment tax return to the last minute. It's the deadline for the online tax return to be submitted and the payment of the tax you owe.
#3. Stay on Top of Bookkeeping
In other words, be organised with your cash dash. Every businessmen and woman must keep track of their books to be able to present them to the authorities when needed.
Another advantage of keeping your books up-to-date regularly and accessible is that you then don't need to spend days, let alone weeks to find all your receipts; dig out expenses you incurred from your bank statements.
It can take any time between a few hours to a week or two to comb through a years' worth of paperwork to have your final numbers.
You can choose what works for you best, but a combination or at least one of the below solutions will make your life easy when you want to put together your tax return: - add receipts and revenue to your bookkeeping system as they occur - set aside a few minutes every week to record everything that happened on that week - schedule monthly "book" hours when you don't only do the math for your sessions and clients but also your books - put all receipts in to a file as you get them then go through your years bank accounts and cash in one go at the end of the year!
There are multiple ways and tools you can use for this from a simple Excel spreadsheet to dedicated software or apps; we'll discuss that in a future article in detail on the PT Distinction blog.
#4. Plan Your Finances with Tax in Mind
It's effortless to spend all the money you earn from clients, but if you don't plan for your tax bill, you may get hit with an unexpectedly high amount from HMRC in January and struggle to deal with it.
The final number will depend on many things; how much you earned, how much of that is above the yearly tax-free allowance, how much you invested in your business that's allowable as an expense and whether or not you have other streams of income.
Until you close the tax year and calculate your tax return, it's hard to estimate how much you actually will need to pay. If you'd like to be prepared, you better set money aside every month that is strictly for paying your tax, on top of any other savings, so you don't need to struggle with the bill.
#5. Don't Wait till January
You have ten months between the end of the tax year and the deadline of your tax bill. Just don't wait till January to start working on it unless you like to put unnecessary stress on yourself, and your accountant if you have one!