Filing your small business taxes for the first time can feel like landing in a foreign country. The language is unfamiliar. And you may not be entirely sure how to navigate from point A to point B.
But the truth is that filing your taxes isn't that difficult. All that is needed is a little pre-planning and getting that first one under your belt. Here's how to go about this.
In the UK, you can file your taxes online or by post (this is called a paper form). But before you can do this, you'll need to register with HMRC.
Registering with HMRC is quick, easy and free. You can do it on HMRC's website, by phone on 0300 200 3500 or by filling in a form and returning it by post. In all three cases, you'll need your National Insurance number, your personal information and details about your business.
Once you complete your registration, you'll receive a Unique Taxpayer Reference number or UTR. You'll need this number to submit your self-assessment tax return.
The simple answer is: as soon as possible after you start your business. However, you have up to the 5 October of your second tax year to register. So, if you started working for yourself on the 7 April 2018, you have up to the 5 October 2019 to register.
The UK tax year runs from 6 April to 5 April. And the deadlines for filing a tax return are 31 October for a paper form and 31 January for an online return. So, the date your tax documents are due depends on when you started your business.
If you started your business between 6 April 2017 and 5 April 2018, your first tax return is due:
In contrast, if you started your business on 6 April 2018 or later, your first tax return will be due on 31 October 2019 or 31 January 2020.
To complete your tax return, you'll need:
If you submit your self-assessment tax return online, the system will tell you exactly how much tax you owe. However, you can also work it out yourself by applying HMRC's income tax rates to your total profit (that's your income less allowable expenses).
You'll also need to pay National Insurance at the following rates:
You can pay your taxes in one of the following ways:
Now that wasn't as hard as you thought it would be. Right?