With Christmas right around the corner, the last thing you want to be thinking about is your tax returns. After all, December is usually a time to wind down your workload before the end of the year, and filling out tax forms is only going to add more to that workload. However, as with most things in life, there’s no time like the present for preparing these important documents, and if you act now, you could save yourself a whole lot of hassle later on.
As you probably already know, each tax year begins and ends in April, and you have until the end of January to file your tax returns for the previous year. If you’re registered as a sole trader, then it’s up to you to ensure that all your tax returns are fully accurate and filed before that deadline. Many sole traders, especially new start-ups don’t earn enough to warrant hiring an accountant, which means the vast majority of them- perhaps you included- will have to traverse the often complex world of forms and red tape by themselves. That makes it all the more important that you spend plenty of time checking over your tax returns carefully, to ensure that you don’t make any minor mistakes that could ultimately cost you big-time.
For that reason, it’s a bad idea to fill out your tax returns in a rush. However, you’d be surprised how many sole traders end up doing just that, by leaving the task until after they come back from their Christmas break. Often, they haven’t even begun to go their financial affairs, and then suddenly remember that they have a big undertaking on their hands. Filing your tax returns involves going through all your paperwork from the last year, and if you don’t get things exactly right, then you risk either paying too much tax, or underpaying HMRC and possibly facing financial penalties.
For that reason, it’s a smart idea to at least make a start on your sole trader tax returns well in advance. If you get all the paperwork in order before your Christmas break, then you can afford to take your time over things, and ensure that your returns are fully accurate. Instead of getting yourself in a panic and rushing things, you won’t make silly mistakes that could cost you big in the long run. After all, when you get back to work in January, you’ll already have plenty on your plate without having complex tax returns to worry about. So, do yourself a favour, and get them filed as soon as possible- then you can enjoy a stress-free Christmas!