When it comes to taxes everything is pretty straightforward: everyone is trying to pay as little as possible. Taxes and tax returns are especially important for small entrepreneurs. When you first star your business every little bit matters and it would be unwise to miss on such an opportunity.
A bit different rules apply if you’re self-employed. Unlike for companies where everything is structured and you probably have an accountant, there are much more factors to be considered in this case.
This is why I’ve written this article to point out the most important things you have to consider when calculating your tax refunds.
- 1. Use CIS tax refund calculator (UK)
As you can presume, there are tools on the internet that can help self-employed calculate their tax return. A great tool is the tax rebate calculator by Quick Rebates as one of the simpler and more reliable ones. As soon as you open the page, you will see several options such as gross income, tax deducted, work related expenditures and so on. All you have to do is fill them in and press calculate. Obviously, it is a really quick and easy solution that doesn’t require any downloads or instructions. All you need is a sheet with your financial data in front of you.
- 2. Account for energy consumption
Most self-employed people work from their home. In that regard, this space is their official office space. Everything that is used is subject to taxation. And of course, as long as there is taxation, there is a chance for tax refund. Here, I am primarily referring to energy and water consumption. Whenever you turn on your PC, this can be considered as company’s expenditures. So make sure to include all these receipts when asking for tax refund. This can drastically increase your profit margin at the end of the period.
- 3. Profit doesn’t matter
What do I mean by this? No matter what happens with your self-employed projects, whether you make profit or not, it is necessary to turn in your income and expenses at the end of the period in order to get your tax return. Diligence is necessary when you have a company and your personal data need to be obtainable and public at all times. With that, we come to the next tip.
- 4. Do not throw away your records
You should never throw away your business records when the year is over. According to the law it is necessary to have these records intact in the following 6 years. In case you don’t have them, some serious issues may arise.
- 5. Having faith in your accountant
When it comes to tax refund calculations you can go no better than having a certified professional accountant. It is necessary to know the right guy who can help you out in this case. Have in mind that most other accounting regulations and laws constantly change. You have to stay on top of everything so you can get the most of it. You should also know that accounting services are tax deductible. In that regard, if you start doing your own accounting you can save some additional money.
- 6. Think about gasoline
Most self-employed people buy a car through their company. Some of the things that you pay for that car have tax rebate. For example, you can reduce the tax and insurance price. One of the most important things to have in mind is that your company’s car uses gasoline. That same gasoline can be used as a company expense. However, if something bad happens car will be considered as organization’s asset.
Note: CC-licensed image by Jake Rustenhoven.