Do you find yourself in a mad rush every January, collecting a year’s worth of receipts together and totting up costs? Or perhaps you systematically log every receipt into a spreadsheet and complete your tax return in April? Either way, managing accounts is often deemed the least favourite part of running a business.
According to the Association of Independent Professionals and the Self-Employed (IPSE), the average total time spent on self-assessment is two working days per year, at a cost of £1.7bn to the economy. For some, it’s such a gripe that they fail to file on time. Almost one in four (24%) small business owners admit to having missed the deadline, according to small business support website Informi. As deadline day looms on 31 January, five self-employed workers give us the low-down on how they manage their accounts.
‘It always ends up as a last-minute scramble’
After quitting the rat race to start a holiday cottage business in the hills of the north Pennines, self-assessment was a bit of a headache. Receipts seemed to crawl out of every drawer, pocket and diary page. Compiling them and making sure that nothing is missed seemed to be a never-ending and daunting task. Trying to find all the necessary receipts throughout the house, in addition to sorting paperwork throughout the year, definitely takes up an enormous amount of my time. I am sure it counts up to more than 15 days a year.
We submitted our last tax return on 31 January with the strong resolution never to be in that position again. I plan to do this regularly to simplify the job and be ahead of the game, otherwise it always ends up as a last-minute scramble. When things get busy, it’s always the paperwork that suffers the most and gets put off to another day. Sandra Mackenzie, co-owner of Greenends Holiday Cottages. Mackenzie lives in Alston, Cumbria
‘Put money away – it’s not complicated’
I’m a bit OCD about my accounts. Every night I add up my takings and once a week I check my bank account to look at my business outgoings and calculate the takings minus the outgoings. And I put 30% of what I make into a savings account.
I write all my numbers on paper because my accountant is old school. I have an accounts notebook – on one side I write my takings, the other side outgoings. I hand this to my accountant every April. A week later he hands it back and has worked out my tax return. I am usually pretty accurate in my calculations, but it’s worth having an accountant – I don’t want to make a mistake and, in the scheme of things, it’s not that expensive.
By filing early, it’s a lot less stressful. It means I know the state of my finances and can plan ahead. Many of my [self-employed] friends say to me that they don’t have enough money in their account to pay their self-assessment bill. I hear it from them every year. I say, how long have you been doing this for? Put money away – it’s not complicated. Jerome Hillion, hairdresser and make-up artist, is based in Margate at The Walpole Bay Hotel
‘I’ll forget to invoice for ages’
I usually accrue a few hundred quid in late charges. Every year, I tell myself I’ll be more organised. I’m a journalist, which means work is speaking to people whose lives have changed in unimaginable ways. Each Friday this leaves me with the feeling I should enjoy my time off. On my deathbed, I won’t wish I spent more time on my tax returns.
I have a very disorganised filing system. Week by week I write down the articles I’ve been commissioned for in my notebook. But I’ll then forget to invoice for ages. Sometimes I realise I’ve worked my way through four notebooks and don’t know which invoices have been paid and which haven’t.
I do intend to set aside evenings to manage my accounts better. But then end up doing something like searching Twitter for old Land Rovers, while inhaling Maltesers by the bucketload instead of organising my notes. Clare O’Reilly is a freelance journalist based in Devon
‘I start each day handling my accounts, it keeps me focused’
Managing my own accounts was a steep learning curve as I’d spent my whole career working for the NHS. When I set up my business in 2013 I just kept simple spreadsheets. I’ve since graduated to using a cloud accounting system, which I update every week. It’s easy to raise invoices and track payments on the system. And, as the business has grown, this makes it easier to keep an eye on invoices and cashflow.
Now I have a bookkeeper to handle my accounts and an accountant to prepare the tax returns, which frees me up to concentrate on growing the business. But I still start each working day looking at my incomings and outgoings. This involves doing things like filing receipts, raising invoices and checking online to see which invoices have been paid, which are due and which are overdue. It keeps me focused. Amanda McGough, director of Amanda McGough and Associates, specialising in wellbeing in the workplace. She is based in Stokesley, North Yorkshire
‘I’m a tax goody two-shoes’
I’m an advocate of what I call intuitive finance. I’m good at predicting or, as my accountant would say with a frown, guessing what business financial outcomes will be. This can be a difficult trait for an accountant to work with. I feel what my numbers will look like and my accountant wants cold, hard evidence.
But I’m a big believer in letting the experts do what they are good at, so my local accountant delivers my year-end accounts and VAT returns, while a friend helps me with long-term forecast and budgeting. I discovered quickly that intuitive finance does not work when you are starting up a new business.
Although I’m an intuitive thinker, I’m also super compliant. You could say I’m a tax goody two-shoes. I always file as soon as I can, and I always pay my personal tax bill about six weeks earlier than the deadline. The sooner the better so I can focus my energies on designing new shoes and talking to my customers. Shaherazad Umbreen runs footwear e-commerce store Shoes by Shaherazad. She lives in Birmingham
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