Seamless Ways To Manage Your Taxes For Any Trade Business

It’s a daunting task for everyone. However, for tradesmen who are known for juggling a variety of jobs and wearing many hats day-to-day, adding tax management to that list can stop them in their tracks. That being said, it doesn’t need to be as complicated and time-consuming as you may think. There are a few practices and strategies you, as a tradesman, can implement into your tax processes that save you time and money. 

Apply Record Keeping Practices

When approaching your taxes, it is essential for tradesmen to maintain an organised method of record keeping to refer to in an accurate and accessible manner. Some of the methods of record-keeping used by many tradesmen are:

Categorisation - Sorting and storing your documentation in a digestible system will allow you to locate your paperwork as and when it’s necessary without scrambling through folders upon folders for hours on end. The categories you could use include tools, supplies, client invoices, employees, vehicle expenses, and more. This form of organisation also guarantees nothing is missed, misplaced or overlooked.

Digitalisation - Digital tools allow you to record and track your receipts, invoices, and business expenses all in one place. This form of documentation allows for seamless access to your information during tax filing time of the year and secure safekeeping of this information throughout all seasons. No tradesman wants to lose important documents or billing details, and this digitalisation ensures that doesn't happen.

Continuous Recording - This is a must, and it's a step you will be thankful for when the time to file your taxes comes around. Set an hour aside each week, bi-weekly or even monthly, to update your records, ensure everything is in order and manage your finances. Having this time to focus on the important admin tasks like this, will ensure you don’t face a backlog that weighs down on your business operations and prevents late fees or penalties.

Tracking Your Expenses

It’s tedious and sometimes overlooked, but tracking your business expenses is a key factor in filing taxes successfully and having a clear understanding of your business's financial health. (It also maximises deductions!) So, how do you set your team and business up for success when tracking expenses?

Use A Software - There are plenty of tracking platforms available to tradesmen; however, none are quite like Powered Now. With our automated expense tracking, your employees, office manager, and business decision-makers can capture receipts, categorise expenses, and integrate them with your accounting software to produce detailed, accurate, and comprehensive financial reports - perfect for tax filing.

Keep Business & Personal Separate - As the owner of a trade business, sometimes lines can cross between personal and work life. When it comes to expenses, it’s best to avoid this to prevent issues further down the line. To do this, ensure you have a business bank account dedicated to your trade company for all financial commitments you make or plan to make. Having your business card separate from a personal card makes tracking expenses seamless and avoids mistakes when it comes to filing and claiming deductions.

Automation - Many businesses will have recurring payments, and regular expenses will leave their account. Setting up automatic payments for these, be that a job management software subscription, a weekly salary, or utilities and travel, helps limit the burden of administrative tasks building up. It also guarantees all expenses are recorded.

Maximise Your Tax Deductions

All tradespeople, including gas engineers, electricians, cleaners, construction workers, and plumbers, will be able to file tax deductions specific to their field. This can significantly lower your taxable income. Here are a few things to consider when it comes to tax deductions:

• Tools & Equipment
• Vehicle Expenses
• Home Office Set-Ups
• Training, Courses & Certifications

Efficient Tax Management

From modern technology, professional accounts, digitalisation, and more, there are so many ways to streamline your tax filing and record keeping as a trade business. Alongside the points mentioned above, here are a few more things to keep in mind as a business owner filing taxes in the future.

• Generate detailed reports with software like Powered Now. This offers a clear overview of your finances and improves your accountant's productivity.
• Meet with an accountant regularly to plan for future tax periods, identify any hidden or upcoming expenses and improve your overall business finances.
• Stay informed and up to date with obligations and regulations around filing taxes as a tradesman.

Utilise mobile apps or cloud solutions for expense management, invoicing, tracking, receipt filing and more to avoid the loss of important information and make the most of potential deductions.

Submitting Your VAT Returns

If your turnover is higher than the threshold, you will be required to submit VAT returns to HMRC. With your businesses creating professional quotes, invoices, expenses, supplier invoices, and related documents all help the process of generating accurate VAT returns. With Powered Now integrated into your business operations, you can submit VAT returns directly to HMRC through our software, taking the stress out of filing.

For every trade business owner, effective tax management is key to the success of your business, not only from a regulatory perspective but also from a financial perspective. With the right tools, knowledge, and organisation, you can make managing your taxes a simple task you keep on top of rather than a daunting process you tackle once a year.

Make the most of Powered Now; book a free demo of our reporting software for trade businesses today.