Dealing with the taxman is just one of the burdens of self-employment - unless you are an accountant, of course.
If you are one of those whose eyes glaze over at the very mention of tax, the best advice is to seek help. Accountants may seem an expensive luxury at first glance but a year down the line they should prove to be money well spent.
Apart from saving you a lot of headaches, a good accountant will probably save you money in unnecessary tax. They know all the allowances and legitimate expenses and will make sure you claim back all that is your right.
It can also save headaches with the taxman. Using an agent gives you credibility. The taxman knows the agent is not going to be “cooking the books” and may be quicker to accept the figures.
Make sure you talk to an accountant before you start. It is no good waiting for the first year to come and go and then discover a few tips that would have saved you money.
An accountant will be able to advise whether or not you are better off to launch as a limited company or to operate as a sole trader. They will also advise on partnership issues and should generally steer you in the right direction.
More advice may well be needed if you are looking for capital with which to launch your business. Your accountant may help with a business plan and suggest tax effective ways of seeking backing.
A lot will depend on the type of business you operate – whether it is seasonal, involves several different clients or whether you effectively work for one company but on a freelance basis at home. (The rules on such home workers have changed recently so it is worth checking the fine print or talking to someone knowledgeable).
An accountant should also be able to offer advice on how to operate some of the aspects of your business. Should you own your car and charge out mileage to the company, or should the company buy it for you, for example.
Your accountant needs to be your business friend. If you already have a good working relationship with someone, lucky you. If not, ask around – other people in your field may have someone they can recommend. Maybe a member of the family can pass on a name. Whoever you choose, make sure you get on with them and can trust them implicitly. The wrong person could cost you dear.
Most will have an initial chat without charge and that should give you a feel of whether or not you are talking the same language. It might be worth checking to see if your accountant deals with any similar types of business or whether they are used to dealing with your level of profit (there is no use talking to a corporate man when you are dealing in hundreds and thousands, not hundreds of thousands).
One myth is that the taxman is an ogre out to get you at any cost. This is not true. They will come down hard on any offenders but if you are genuine, they will be as helpful as they can.
If you need help and do not have an accountant, do not be afraid to ask. Officially the tax office says returns have to be back in during September to qualify for assistance but if you have a simple question, phone up and ask.
Generally most tax officers would rather sort something out over the phone in a few minutes than spend days doing needless paperwork.
If you are interested in finding an accountant but don't know where to start, we've done a bit of research and found TaxAssist Accountants who specialise in offering tax advice to small business owners. They offer a free initial consultation which lasts no longer than an hour and which puts you under no obligation to sign up as a client. The consultation also gives you the opportunity to decide whether or not you feel that you can form a working relationship with that particular accountant. If this is of interest you can fill out this simple form