It is possible that you could be under-claiming when it comes to expenses and overpaying on your taxes because you are not managing your personal service company efficiently. There are a number of reasons for this such as losing receipts or paying too much for travel as a result of not keeping records of journeys which results in claiming for petrol as opposed to mileage.
Managing your expenses efficiently, doesn’t have to be time consuming but it will save you money, so how do you do it?
Record allowable expenses : It is possible to claim for all expenses that are not personal and it is also possible to claim for expenses that come with entertaining customers. As you incur these expenses, it is vital that you record them as this will save you money and you also won’t have to worry about losing receipts. To record expenses, you will have to include the receipt, the customer or job that the expense is related to. If it is a travel expense, not the mileage and if it is for entertaining the customer then record the customer name, company name and why you are entertaining them.
Limit Paperwork : Take a photo of your receipts to avoid losing them or even having the ink disappear from them because they have been hanging around for so long. This will also mean that you do not have to sift through lots of paper when the time comes to doing your accounts. In terms of an audit trail, a photograph is valid and so, keeping it digitally will ensure that you also save time.
Create a voice record of your expenses, detailing what the expense is all about. Whether this is associated with entertaining a client or logging down the mileage, it will remove the need for any unnecessary paperwork.
Have more time and money with improved records and reduced paperwork : The two steps above will make the whole process of claiming for expenses a lot smoother and less time consuming. It will also make it possible to claim the right amount of tax while also paying the right tax, all of which means that the business will have more money.
Operating as a one-man company means that you spend the majority of your time on your business and generating an income and working on jobs. This is all well and good, but once you begin to let your expenses and claims spiral out of control to get them back on track is going to cost you time and money.
Keeping on top of it can be done in as little as 20 minutes a month but choosing to not keep on top of it can result in up to 10 hours’ worth of work a month and that is where you will begin to lose money. Staying organised is the key to efficiently managing your taxes and that can be done a lot easier these days thanks to modern technology.
If you have any questions related to your personal service company please call The Accountancy Solutions for a free and confidential advice.