Tax season is the ultimate test of your business readiness.
It doesn’t need to be painful or unpleasant – follow this guide or watch my video, and I’ll explain how you can prepare easily and effectively.
The Challenge of Tax Season
Tax season can be really stressful, but it doesn’t have to be. Throughout my career, I’ve seen that most companies leave their accounts to the last minute – often just 7-9 months after the year-end, which is dangerously close to the tax filing deadline. But there’s no reason you can’t get your accounts sorted just 3 months after your year-end.
Filing early - Paying Early?
A common objection is that doing your accounts early means having to pay your taxes early, too. But this isn’t true – the deadline for paying corporation tax is 9 months after your year-end, regardless of when you file your accounts.
Wouldn’t you rather know your tax liability with 6 months to spare?
Ideally, you would have forecasted and set aside funds, but even if not, having 6 months to prepare has got to be useful.
If you know your tax bill with 6 months notice, you can divide the amount and pay it monthly to HMRC. This goes against traditional advice of paying on the deadline, but with interest rates rising, HMRC actually pays interest on early corporation tax payments. Paying monthly clears your liability and earns you interest – a win-win.
When it comes to tax season, break the cycle of leaving it to the last minute. Get your accounts done early so you know where you stand and can plan ahead.
Organise Ahead
Before you start, be organised and up-to-date. With cloud accounting platforms like Xero and QuickBooks, you can easily import bank statements and keep them on top of your records. The more organised you are, the easier tax time will be. Look where you can make small improvements to get your business finances shipshape.
Speak To Your Accountant
Liaise with your accountant – they can advise on pre-year-end planning, help prepare regular management accounts to forecast your tax liability, or just ensure your year-end accounts are filed quickly. For most business owners, you don’t need to be an accounting expert as long as you have a good advisor.
Now you know these best practices, start putting aside funds for your corporation tax before the year end. You’ll then have a pot ready to pay the bill, rather than a nasty surprise. And if you’re earning little interest, pay early to benefit from HMRC’s generous rates. Early payment also boosts your credibility with the tax office.
Getting your taxes filed and paid doesn’t have to be a source of stress and anxiety. By following these steps and getting organized early, you can prepare properly and minimise any surprises. If you need help improving your accounting processes or want a review of your current tax planning strategies, I’m offering a free 30-minute discovery call.
This is a chance to ask questions and get honest feedback and advice, with no obligations or sales pitch. Just book a time that suits you, and we can discuss how to optimise your tax preparation. With the right guidance, you can make tax season smooth sailing for your business.
