For many people, the new tax year has arrived without much fanfare.. Perhaps it’s because no significant tax changes are kicking in for 2021/22; maybe it’s because most of us are a bit distracted by the post-lockdown roadmap and life in general.
But the new tax year is still an important milestone for your business, particularly for making plans and setting your affairs in order. By taking a few simple steps now, you can plot a course for the year and reduce the chances of running into unforeseen finance, admin or other management challenges in a few months.
1) Confirm your tax plans
Hopefully, you followed the advice in our earlier blog about closing out the old tax year correctly. Once your invoicing and expenses are in order, you should start to think about when to prepare your tax returns.
The official HMRC deadlines are October 31st for paper returns and January 31st for online. But ask any accountant, and they’ll tell you to avoid leaving your returns to the last minute. It’s even more critical if you’re relying on an accountant to prepare them – they’ll have lots of clients to support, so you’ll need to check their availability well ahead of time.
And don’t forget that, if you’ve previously completed a self-assessment tax return, your next payment on account may be due on July 31st. You should already know how much you owe, but in case you’re confused, the Government has provided this helpful explainer.
2) Spring cleaning
Giving your business a ‘tidy’ is never a bad idea. And it’s a handy thing to do at the start of a new tax year to say goodbye to any clutter, and give you the feeling of a fresh start.
Why not start by getting your inbox to zero, or replying to that message that you’ve been putting off for a while? Next, you can get onto your calendar and get rid of those recurring reminders that are no longer relevant. If you’re feeling courageous, you could even dive into your contacts book and add in some of those missing entries that you never got round to completing.
Other useful tips? Well, you could overhaul your system for tracking and storing expenses, especially if your current system involves hoarding large quantities of paper receipts in your desk drawer! Whether it’s expenses, invoicing, time tracking or any other ongoing process, this is a great moment to establish and embed new and improved routines for how you run your business.
With a Monzo Business account, you can snap photos of your receipts and attach them to your transactions - so you can say goodbye to those old shoeboxes of paper receipts. You’ll thank yourself later!
3) Upgrade your tools
If you’re thinking about making a change to your essential business tools and services, now is an excellent time to take the plunge. Maybe there’s business management or accountancy software that could save you time and money. Perhaps you’re ready for your business to go paperless. Or perhaps you’re unhappy with your business bank account and want to make a switch.
Whether you’re reviewing your bank, energy supplier or pensions provider, changes made at the start of a new tax year are almost always neater than mid-year alterations. For example, your tax-free savings allowances (for both pensions and ISAs) reset at the start of the new year. Energy and other utility providers’ price changes are usually introduced in April. Running with new accountancy software won’t require you to upload all of your invoices and expenses from the previous year. The list goes on and on!
4) Plan your finances
Now that your business is tidy and ship-shape, it’s time to do some financial planning. Business owners who have a clear sense of their targets tend to find it much easier to organise their workload from month to month.
If you’re new to running your own business, it’s a question of setting a (realistic) financial target for the year ahead and then working out how you’re going to achieve it. For example, how many clients or customers will you need to win, will you need extra staff, can you list out every conceivable outgoing that you’ll have to cover along the way?
If you’re a few years into your business venture, you should have a pretty good idea about what your target income needs to be. But remember that most people’s businesses have been affected by the pandemic in one way or another (just think about your travel costs, for starters). Last year’s numbers might not be the best guide for planning this time around.
Finally, don’t forget to think about how much time you want to spend working versus doing other things, and consider your financial targets alongside your work/life balance.