There’s a lot to deal with when you’re running your own business; it can be really overwhelming, and that’s without VAT adding to this. This video was designed especially for you, where I will give you six tips that will take some of the pain away from filing your VAT returns. Follow my video or read below!
1. Charge the right amount
This may sound basic, and I don’t mean this to patronize you but charge the right VAT amount. I’ve worked with many businesses over the years that produce their invoices on Word, which doesn’t have any form of calculation. Although they have every intention of doing the VAT right, it’s easy to make mistakes this way, so make sure you are charging the right amount of VAT, so mathematically, it is correct. There are loads of occasions where this can go wrong, and it can mess up your VAT and provide an incorrect return, which just causes you more pain later down the line.
Also, bear in mind that you’re in the right VAT scheme. In previous videos, I’ve spoken about understanding your customers and knowing what to charge them for VAT. It could be that you’ve got different products and services that one may be exempt, standard, or zero-rated. So, make sure that every time you raise the invoice to your customer, you charge the right amount of VAT for that product or service.
2. Up-to-date bookkeeping
Your bookkeeping should be updated on a regular basis, and make sure that this is consistent; there is nothing worse than leaving it right to the deadline. Because I can guarantee that time that is going to be the time when you’re going to be missing receipts, you’re going to be missing invoices; you’ll need to provide these. So, do not leave anything to the last minute and make sure that things are updated regularly. Also, it is always good to have a person checking that all the data entered is accurate. Regular reviews could really help your business.
3. Keep all your records
I did mention this earlier, but keeping your records is key. You cannot claim the VAT back on your costs unless you’ve it supported by the appropriate receipt or invoice. If you don’t keep these records and get checked by HMRC, you can’t claim this VAT and might face a penalty. So, think all of the money, if you add this together this could come to a significant amount of money that is going down the drain and not in your pocket. While it sounds a bit annoying because we’re all busy and rushing around and things are going on. If you’re not keeping the receipts, you are chucking them down the drain.
4. Pay your VAT by Direct Debit
Today, we are living in a direct debit culture; we’re all used to it, we all know it, and secretly, some of us really like it. Paying your VAT by direct debit will ensure that you won’t miss any deadline and not get hit by heavy penalties. When you submit your VAT return, get a direct debit set up for your VAT return because they will collect it for you, and you will have one less thing to do. I think it’s a great idea to make sure your VAT is paid on time. One thing to bear in mind if you are putting your money into a separate savings account, make sure that money has been transferred back into your current account before the money is taken, so the DD does not bounce, and you don’t incur any additional charges.
5. Accounting software
In a previous video, I spoke about accounting software which I’ll go into in a lot more detail. When you’re doing your VAT return, make the software do some of the work for you, even if that cost you a little bit of extra money; this additional cost will save you extra time, and as a business owner time is very important to us. When you’re filing your VAT returns, make sure you’re not scrimping on using rubbish accounting software, use the one that makes your life easier because, under the current legislation making tax digital, you have to file your VAT returns electronically. And these systems also allow you to keep copies of your invoices. Say bye to the endless files, folders and banker’s boxes, and all the other rubbish that we had to keep before, now you can store everything electronically, so you are compliant when HMRC wants to check these figures.
6. Don’t wait until the last minute
Please do not be like the rest of the crowd and sit there on the 7th day of your VAT return because it’s deadline day. What a waste of time, money, and stress; it is simply not worth it. Most people receive electronic invoices now that can be stored in your accounting system. We are downloading bank feeds and getting our transactions directly into our accounting software. The days are gone when we had to wait for paper statements by post to write up our cashbook. So why don’t you take advantage of the technology and get it done quickly? You can easily get your VAT return done by the 10th or even the 14th of the month. The benefit of this is that you know what your VAT return is two or three weeks before paying it.
You don’t get that surprise of “oh my god, my tax bill is 25 grand, but I don’t have that much money in the bank, what I am going to do?” Please do not be like the rest of the other muppets that are leaving it right to the deadline, doing it where you potentially will cause yourself more stress; get it in, get it done, get finished, get it filed. So, you know what’s going to be paid either on a future bank payment, or a direct debit in two to three weeks’ time, and you have the time to manage your finances and make sure this is paid in time.
VAT can be overwhelming for everybody, so if you’re finding yourself completely overwhelmed and stuck with this, go, and ask a professional to help make sure they know what they’re doing so you can get your return done accurately and on time. This will allow you more time to go and concentrate on your business, build more sales, and make more money.
So don’t be frightened to go and ask for help to get your VAT returns done for you. It can benefit you massively within your business and let you concentrate on the things that you do well.
If you’ve got any further questions that come up, that’s fine. Click my calendar link below. I’ll be happy to jump on a call or a Zoom and take on board any questions you have. I promise there’ll be no pushy sales pitch.
