New research reveals worrying insights into the way some small business owners are managing their tax returns.
New research by online accounting practice The Accountancy Partnership has revealed that 532,400 business owners still use traditional and outdated methods to track finances and store important documents.
Sunday 31st October is the deadline for businesses to submit paper tax returns, and the ‘Boom and Bust’ report by The Accountancy Partnership – which surveyed 1,200 entrepreneurs – has uncovered some interesting finds, including the concerning fact that one in 10 business owners store essential documents in a drawer or shoe box.
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Get StartedThe reports key findings – some tax return methods are outdated and inefficient
Although HM Revenue & Customs recorded that 10,274,940 tax returns were filed online, 95.64% of the total, more than a third (37%) of entrepreneurs use photos taken on their mobile devices, or paper-based systems to keep track of their finances.
One in five (22%) of entrepreneurs are reliant on a digital spreadsheet.
One in ten business owners stores essential, confidential documents incorrectly – keeping them in drawers and even shoe boxes.
If you need help understanding how to complete your self-assessment tax return, why not check out our comprehensive ‘how to’ guide to help you.
Analysis
If you are one of the business owners relying on a spreadsheet or storing documents incorrectly, your tax return methods are outdated, inefficient and bound to be causing you a huge headache.
Not only are you wasting large amounts of time (or more annoyingly your accountant’s time) going through a never-ending pile of paper-based records, but you are also at risk of losing track of important documents that HMRC may request from you. These documents include claim forms and company tax returns.
If you don’t keep adequate records, and can’t show evidence of the documents you used to complete your tax return – you may have to pay a penalty.
Talking about the report’s findings, Lee Murphy, Managing Director at The Accountancy Partnership, said:
While the tax returns season is a busy period for all, it can be difficult for those still using paper-based systems and physical returns to collect and store all the necessary documentation. We understand that not everyone is technologically savvy, however using digital accounting methods, and saving digital copies of invoices and receipts, makes the process of filing a tax return much easier when the time comes.
The positive news is that the majority of entrepreneurs surveyed – 63% – are storing financial documents and expense receipts digitally and securely, and 67% are making use of accounting or bookkeeping software to manage business expenses.
The best accounting software for your business
If you are one of the 37% of entrepreneurs using outdated methods to file your tax return, you should definitely consider using online accounting software to make your life easier.
Not only will accounting software save you tons of time, but it can also save you from the risk of hefty fines from HMRC as it stores all of your documents digitally – safely and securely, so you are able to provide the correct documentation when requested.
We at Startups have been helping small businesses grow successfully for over twenty years by offering them software and product guidance, including in-depth reviews of the best accounting software providers in the UK.
If you’d like to learn more, check out our extensive guide to the best accounting software for small businesses.
You can save yourself the stress and time of filing your self-assessment by getting someone to do it for you. Taxscouts is an affordable online service that charges a flat fee to complete and file your tax return on your behalf. The company was recently featured in our Startups 100 top 20.
