Accounting boosts for businesses ahead of new tax year
Small and medium sized enterprises in the UK could save time and money in the next tax year by adopting a simpler approach to accounting.
Her Majesty’s Revenue and Customs (HMRC) is urging businesses to join a new scheme that means they are taxed on money flowing in and out of their business, rather than using full accounting rules.
With the new tax year beginning in April, the “cash basis” scheme could mean sole traders and unincorporated businesses with an annual income of less than £79,000 could simplify their accounting.
This would mean they stand to save time and money, as the timely aspect of accounting would be removed.
Using the scheme, businesses can work out the cash received in a tax year (less any money spent on business expenses).
This removes the need for time-consuming calculations and complex adjustments that were set up for larger business enterprises.
As well as saving on accounting, a full-scale business turnaround could also drastically remove spending by reducing unnecessary payments.
Making accounting simpler
Businesses providing a service, such as hairdressers, taxi drivers, painters and decorators, are most likely to benefit from the system.
“Simplified expenses” is also in place to help unincorporated businesses and this uses flat rates rather than complex calculations for expenses.
It is useful for calculating the business costs for vehicles and for business use of a home, as well as for the private use of business property as a home.
For start-up businesses this is especially useful as it means time can be spent solving other issues rather than worrying about administration.
“The cash basis and simplified expenses schemes can help save small businesses time and money,” explained HMRC’s Carol Lunney.
“With a new tax year on the horizon, now is the time to start thinking about them.”
By Phil Smith