The year is drawing to a close and, here at Gorilla Accounting, we’re taking this time to look at what 2022 will bring – and what resolutions contractors and sole traders should set for the next twelve months!
The start of a new year offers the chance to take stock of your business and think about what the future will bring, so take this opportunity to set goals you can meet throughout 2022. This article will look at what you should focus on from an accounting perspective so that you’re organised and can stay on top of your accounts.
Things You Didn’t Get Around to This Year
If there’s anything you wanted to accomplish in 2021 but simply didn’t have the time – for example, selling a new product or developing a new service – set a goal for the new year that will let you achieve this.
Make a list of everything you want to get around to and consider what’s feasible. It’s important to break tasks down into accessible goals you can achieve, so you don’t feel disheartened if you can’t reach a specific target.
Set SMART goals that are specific, measurable, achievable, realistic and within a time frame. This will give you focus and clarity to get to where you want to go.
Keeping Track of All Receipts and Transactions
As contractor accountants, we know that the last thing you want is to get to tax season and dig through boxes of receipts or invoices to figure out what to put on the documentation you send HMRC. This will only lead to stress and, of course, mistakes on your returns, which, in turn, will lead to issues.
But don’t worry – FreeAgent bookkeeping software helps you stay on top of everything. The tool is used by thousands of small business owners, contractors, sole traders and locums, and gives you real-time access to your accounts, so you can quickly make informed decisions in your business.
You can also access the software from any device and anywhere, meaning you can even check your information on the go if you’re busy, for example.
FreeAgent is designed to keep your receipts, invoices, transactions, expenses and more, organised and easy to retrieve, so doing your self-assessment or submitting your corporation tax is easier than ever. What’s more, FreeAgent is also compatible with Making Tax Digital.
So, if you haven’t yet, make sure to stay on top of everything, even if it seems insignificant to you at the time. You’ll find it so much easier to pay your taxes!
Preparing for Changes to Making Tax Digital
Making Tax Digital for Income Tax is coming soon, so make sure you’re ready now, so you’re not scrambling with last-minute preparations! For now, Making Tax Digital only refers to VAT but, from 6 April 2024, self-employed businesses and landlords with an income of over £10,000 will also need to comply with the rule.
From 2024, you must start keeping records digitally and update HMRC regularly instead of submitting a self-assessment tax return – you’ll have to submit four quarterly reports and one year-end submission, so get organised now.
In addition to this, if you run a limited company, you’ll have to comply with Making Tax Digital for corporation tax as well, although this won’t come into effect before 2026.
Accepting More Contracts
Another resolution to consider in the new year is getting multiple sources of income, which offers several advantages, including peace of mind that you won’t be left without a salary if you lose a client.
If you’d like to expand your portfolio or work on different types of projects, now’s the time to do it. Set a goal for 2022 and start your search, but, first, make sure that you’re able to juggle all your projects.
On the other hand, if you’ve been struggling with too many projects throughout 2021, make it a 2022 resolution to reduce the amount of work you’re doing. This will help you to improve your work-life balance as well.
Taking Care of Your Self-Assessment
Make it a goal for 2022 to take care of your self-assessment with plenty of time to spare. This means filing the return as early as you can – so, for the tax year of 2021/22, you can submit it any time after 6 April 2022 if you so wish.
However, if you did leave your self-assessment for last-minute (for example, if you use the online service and are rushing to file for the tax year of 2020/21), we can help, as we provide self-assessment tax return services that will save you time, stress and money.
So, while doing everything last-minute can be daunting, you don’t have to go through it alone – and risk errors on your submission. As sole trader accountants, we’ve got you covered, so let us handle it for you.
Investing in Training and Development
As a self-employed person, it’s important that you continue to invest in yourself as well as your personal and professional development. Whether you sign up for a training course or attend a conference, make training a priority in order to expand your skillset.
By doing so, you can offer new services to your clients and raise your rates on top of that, seeing as you’ll be more in demand too. Create a plan at the start of the year, and make sure to dedicate time in your schedule for personal development.
It can be easy to brush this time aside when running a business takes up so much of your time – however, if you do this now, you can reap the rewards later and you might even get the chance to work with fewer clients for higher rates.
If you’re feeling stagnant in your career, you’ll also have the opportunity to do different work than you’re used to and to face new challenges. This will help to keep things exciting and to keep you motivated.
Updating Your Rates
With a new year also comes new expenses and increased cost of living, so you must review and update your rates – if you haven’t done this for a while, now’s the time to sit down and figure out what to charge your clients, especially if you need to raise your hourly or daily rates.
In addition, it’s clear that businesses need to be ready for the unexpected, as we’ve seen with the pandemic, so being able to put more money aside is a plus.
It’s natural to feel nervous about increasing your rates and losing clients, but many customers will understand your pricing and prefer to stay with you (knowing you do a good job) while paying a little more.
Claiming All Your Expenses
In 2022, don’t forget to claim all your businesses expenses. Make it your goal to understand what can be claimed and what can’t, especially because this differs from sole traders to limited company owners and keep track of everything. This will help your cashflow as well.
There are many things you can claim, from stationery and computers to software and some forms of travel. If you’re not sure what you’re allowed to claim, contact us for more information and we’ll be happy to help. Our accountants have many years of experience in a range of sectors and can easily answer all your questions.
Being Harsher on Late Payments
This is one of the major issues facing self-employed individuals, whether they’re sole traders, locums or limited company directors. No one likes having to chase after late payments, not to mention how worrying it can be to have bills to pay while your clients haven’t paid you yet.
This new year, make the resolution of being stricter on when and how you receive your wages. When you create a contract with a client, make sure to include details like a deposit, a payment in the middle of the project (if it will take a long time), and then the rest of the money once you complete the project.
This way, you’re never left without wages. Also, it’s easier to chase late payments when you have a solid, legal document to rely on.
Reduce Your Tax Bill
As self-employed, you want to make your business as profitable as possible, so making sure you’re not paying too much tax should be a priority in the new year! Unfortunately, many contractors, sole traders and locums end up paying more than they should because they don’t account for everything they’re entitled to, such as allowances and reliefs, so this is something to keep in mind when you do your taxes.
As small business accountants, we’ve helped countless self-employed individuals to save money, and we can help you as well. We’ll review your accounts, provide expert tax advice, and more, ensuring you’re aware of all opportunities to save money.
Apart from reliefs and allowances, you may also be able to become more tax-efficient by setting up a limited company if you’re a sole trader. Depending on your annual turnover, this can be the best decision for your business, especially because you also gain limited liability (meaning your personal assets are protected in case the business goes into debt or the company becomes insolvent).
So, if you’re looking for limited company accountants, look no further than Gorilla. We’ll help you every step of the way, including dealing with Companies House, so you can, instead, focus all your time on growing your venture!
Getting an Accountant
Have you been doing everything yourself so far? There comes a time when an extra pair of hands can make all the difference; for instance, if you simply can’t find the hours to focus on bookkeeping or if you’ve made a mistake in your last return, having a dedicated accountant on hand to take care of everything for you can be the best solution for your business.
As a 2022 resolution, consider hiring an accountant who can help you with any questions you may have, prepare and submit your tax returns, help with dividends, assist with HMRC records checks, remind you of all key deadlines, review your bookkeeping data for accuracy, assist with share issues, help with Capital Gains Tax, ensure you’re compliant with IR35, and so much more.
Think about how much time and money you can save!
At Gorilla Accounting, we’ll do this and more. You get a same-day response to any of your urgent queries if you contact us by 3pm, unlimited support in person or via video calls, phone and email, and a specialist accountant who knows everything about your business and industry.
We also provide a registered office address service for just £10 + VAT per month, so what are you waiting for? We make it easier for you to switch accountants as well so, if you’re unhappy with your current service, speak to us today.
You can send us your enquiry and get a callback or ring us on 0330 107 9670. We’re a friendly bunch and look forward to hearing from you – and help you prepare for the new year, whether you’re still thinking about taking the leap into self-employment or if you’re already an established business with years of experience.