Now that January has passed us by, lots of us have either dropped our New Year resolutions or firmly made habits of them. However, just around the corner is the start of a new tax year. This opens up a fantastic opportunity to use the power of resolutions and goal-setting in your business life.
We’re fans of the saying: a goal without a plan is just a wish. Why? Because science shows us that we need to actively plan our goals. In fact, a Harvard Business Study showed that the 3% of their MBA graduates who wrote down their goals ended up earning ten times more than the other 97% of graduates put together. Plans matter.
So what should your business plans, a.k.a. resolutions, be for the new tax year?
1. Know your numbers
When running a small business it’s very easy to leave the financials to tick along in the background. After all, bookkeeping isn’t what you set out to actually do with your time, it’s more of a necessary evil.
However, knowing the current state of affairs for your business is essential. You need insight into cash flow, invoice payments and more. It’s impossible to operate well without this knowledge.
Therefore, make the 2023/24 tax year the one where you start actually paying attention to the figures.
2. Little and often
To help you with the first, and to prevent mistakes, or mountains of work next year, embrace a resolution of doing your books on a little and often basis.
Cloud accounting software Xero makes this short work. Simply log things from your desktop and it does the hard work for you. You’ll thank us when you don’t have the tedious task of working your way through 12 months of invoices, receipts and bank statements.
3. Chase invoices
There’s good business sense to chasing invoices and ensuring payment on time. Healthy businesses need healthy cash flow. That’s impossible without your invoices being paid on time.
However, a disproportionate amount of time can be spent chasing just one or two tardy customers. Again, Xero makes it easier. Invoice reminders are automated and you can quickly see which offenders need a quick chat.
What’s more, learn from these and don’t let them turn into repeat offenders. Change your payment terms for them if necessary.
4. Use software to make your life easier
There are tools out there to make the life of a small business owner considerably easier. Think about the laborious elements of your business particularly in terms of where repeated tasks are involved.
Then make it your mission to start the 2023/24 tax year with software to make these tasks simpler. All businesses can benefit from cloud accounting software, but you may also want to use diarising apps, inventory control software or email marketing tools.
A great app that we use here at Blue Arrow is Hubdoc. This nifty piece of software lets you snap a photo of your receipts and it automatically feeds through to Xero. It also means you don’t need to worry about finding those paper receipts at year end.
5. Save for tax
No one likes a tax bill. However, it’s a great deal less painful if you save for it automatically along the way. Automatically move part of all income into a dedicated account which is for tax only. Effectively think in terms of this account not existing – it’s purely there just to pay the tax man.
6. Making tax digital
If you’re a VAT registered business you’ll need to file your VAT return digitally. This means you’ll need fully compatible and functional software to do it.
The good news is that this is great for your business anyway, helping to be efficient and excel at accurate record-keeping. Xero is ideal.
7. Know the business expenses rules
HMRC have been really tightening up on expenses loop holes. There are no excuses for getting it wrong. Your cloud accounting software should help you. However, make this the year you swot up on what you need to know. If you have employees incurring expenses see here, and if you’re self-employed this is for you.
Make 2023/24 the tax year where you make resolutions and goals which will ensure your business’s health. Just remember to write your goal down and take active steps to achieve it. If you’re not sure where to start, get Blue Arrow Accounting on the case.