If you’ve recently completed your accounts in time for the January 31st deadline, you might still be dealing with the stress headache and administrative hangover that comes from the annual rush to get your finances in order and up to date.
But what if there was a way to make it all much easier next time around – a way that HMRC actually want you to use?
‘Cash basis’ accounting aims to vastly simplify reporting for SMEs, so that their accounts do not need to be filed according to the full normally acceptable accounting principles.
It is available to unincorporated businesses and sole traders, providing their annual income is less than £79,000, and aims to save both time and money when it comes to determining how much tax should be paid.
“Using the scheme involves a business simply working out the cash received in a tax year, less any money spent on allowable business expenses,” HMRC say.
“This means small businesses won’t need to spent time at the end of the tax year making complex accounting adjustments, and other calculations designed for larger businesses.”
HMRC are also offering a simplified flat rate of accounting for business expenses, making it easier for unincorporated businesses to calculate deductions for:
- Vehicle usage for business purposes;
- Use of the home for business purposes;
- Use of part of a business premises as a home.
Speaking for HMRC, Carol Lunney said: “The cash basis and simplified expenses schemes can help save small businesses time and money. With a new tax year on the horizon, now is the time to start thinking about them.”