I bet you’ve heard the phrase, “save for a rainy day” a lot throughout your life. But, have you actually paid attention? Are you good at saving? If saving comes naturally to you, then you’ll be great at making sure that you have money set aside to pay your tax bill. From experience this is a small minority of people! The majority like to spend! Therefore we’ve put these helpful tips together to make sure you set money aside for your tax bill.

Submit your self assessment as soon as possible

Taking the earliest opportunity (6th April) to file your self assessment will mean you have 9 months in order to save to ensure you have the right amount in order to pay by 31st January the following year. This means there won’t be any nasty surprises and you can work out how much you need to save each month so you don’t fall short.

The best ways to save

We always tell our clients to keep all personal and business transactions separately. This isn’t a legality for Sole Traders but it is for Limited Companies. We recommend even if you are a Sole Trader having a business account. What we also advise is to have a business savings account too. If you bank with Starling, then your business bank account will have the capability in the app to create saving spaces. You can create various different ones, for example you can create one which is saving for tax, one which is saving for a new piece of equipment and one which is saving to give yourself a bonus! Whatever you need to save for, the saving spaces work really well. You can set them up so when you spend from your business account the amount you spend is rounded up to the nearest £1 or £5 etc ( you set it) and the amount automatically goes straight into your savings space. For example you buy a train ticket and it costs £10.50, 50p would automatically go into your savings space. This way you’re saving without even realising it! You can also choose to set up a standing order to automatically add money to your savings space each month, or you can manually transfer an amount across. 

What do you have left after outgoings?

Work out what you have left each month once all your outgoings have gone out. Leave a little for contingencies and save the rest.

Save a percentage of all sales revenue

For every sales transaction you receive, put a third of it aside for your tax bill. This way you won’t be tempted to overspend and will have the right amount of money to pay your tax bill. 

Outsource your bookkeeping

If you outsource your bookkeeping to LJM Bookkeeping Ltd we will help you to put a plan in place in order to save for your tax bill. If the unexpected happens we can review and replan accordingly. Having a bookkeeper you can turn to, to give you helpful advice and support as well as to make sure you’re claiming all the relevant expenses will mean your business becomes more profitable.