As a self-employed mum, your tax situation will be different to those in full-time employment as you are required to keep track of and submit your own tax return each year. Preparing your self-employment tax return can be daunting and it is a time that many solopreneurs dread each year, but don’t panic – here are five top tips to make it a little easier. 

 

  1. Set aside money throughout the year
    When an invoice is finally paid it’s important to remember that some of it may be owed to the taxman. Although it can be tempting to spend the full amount you need to put some aside to avoid a nasty tax bill at the end of the year which you may not be able to pay. As a general rule set aside 25% of everything you earn into a tax account and don’t touch it! When the time finally comes to pay your taxes out of this pot and because you have been putting aside money from everything you have earnt and not just your taxable allowance you may have even accrued some nice savings too.  
  2. Keep clear digital records
    Tax is now digital which means you need to keep digital records of all your invoices and expenses. Don’t leave sorting out your records to the last minute but instead set aside time to tackle them at the end of each week or at the very least at the end of each month. This will make it much easier to provide evidence should you ever be investigated by HMRC.  
  3. Use an accountant
    Keeping your own records is hard work, there’s no doubt about it, and as a busy mum, you may find that it’s simply much easier to outsource the job to someone else. There is now a range of tax specialists out there from local accountants to online tax agencies who can offer you complete accountancy packages, giving you the peace of mind that your tax is in good order and enabling you to spend more time with your family.  
  4. Make maximum use of tax deductions
    No one wants to pay more tax than they have to, so be sure to research the tax deductions available to you. Some of the common ones that are overlooked include the home office deduction which will enable you to claim back a proportion of your home costs for working a home, unpaid invoice deduction, office supplies deduction (which includes planners, pens, etc) and tax service deduction which means that your accountancy fees can come off your final tax bill too.  

Consider paying estimated taxes
If you are worried about putting aside money each month then another option would be to pay estimated taxes on a quarterly basis. This can help you to avoid a hefty tax bill at the end of the year and reduces the temptation of dipping into your tax pot, but remember tax estimates are estimates and you may end up with a rebate or you could still be required to pay even more. 

This is a collaborative post.