Business – LJ’s Journal
TAX IT UP
Louise Jensen continues her business journal by sharing with HTM readers how she ensures her self-assessment tax return is completed just in time for deadlines (with the help of a glass of wine)
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HEN I first made the big leap into running my own business, I thought no further ahead than my love of therapy and how awesome it would be to make a living out of it. On the advice of my self-employed sister, I registered my business with HMRC, filled out the paperwork for a National Insurance exemption certificate, and then promptly forgot about the ‘boring’ stuff. Of course, on some level I knew that cash was changing hands and income tax would need to be paid at some point, but I lodged this firmly into my subconscious and thoroughly enjoyed my first year of self-employment. When the paperwork for my annual tax return arrived, I felt so overwhelmed that I hid it until the week before it was due. Then with great trepidation and a little help from both a friend, and several bottles of Chardonnay, I tackled the mammoth task of collating my income and expenditure for the entire year in one go. The biggest challenge of all was actually finding bank statements and receipts, some of which were scattered around the house in various places, others had festered for so long in my bottomless handbag that they had either disintegrated or were lost forever. Miraculously, it was completed (only just) before the deadline. I escaped the late fees by the skin of my teeth and vowed never to be so disorganised again. I promptly signed up for an evening course (RSA Accounting and Bookkeeping) at my local school, which I found surprisingly enjoyable. Although I learnt way more than I currently need to know, it enabled me to approach this now necessary part of my life with methodology and confidence.The first thing I did was to set up a separate business bank account. Luckily, I encountered a really lovely clerk
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in my local branch; she whispered to me that although I had my current account that there would be hefty fees for their business services and advised me to go next door where there would be no charge. On a roll, I then went shopping (something I never avoid) and bought a duplicate receipt
down with my obligatory glass of wine and enter all relevant figures from the previous month on to a spreadsheet. At the end of each tax year, I enter my annual figures online, and box up all the paperwork to store for the legal six-year requirement. I find this routine simple, yet strangely satisfying. n
set up a separate business bank account book, and various files - I was good to go! For each treatment, I give my client a receipt from a duplicate book. My copy gets filed away in the relevant month’s income file. I don’t take card payments so all the cash and cheques I receive are paid into the bank each week. Out of this, I transfer twenty-five-per-cent to a separate savings account to cover tax and I draw a percentage of the remainder each month for my personal living expenses. Throughout the year, for everything I buy I consider whether it would be used for the benefit of the business or not. If it can, it is tax-deductible and the receipts are filed in an expenses folder (i.e. a percentage of my gas and electric as I use part of my home office/treatment space, phones, and fuel, I record my mileage when I travel to clients, give talks). I now choose to pay National Insurance contributions on a monthly basis. After my first year exemption I began paying Class 2, and I have now increased this to Class 4 to ensure I receive a state pension when I am older. On the first day of every month I sit
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