28 November 2017
If you’re a freelancer, sole trader or self-employed contractor, getting your receipts together to complete your income tax return can be a tedious task. But if you use cloud accounting software throughout the year, the whole job can be far easier.
Software like Xero online accounting, gives you have a web-based way to run your business accounts, plus the ability to store all your expense receipts, invoices and other business documents in the cloud – and that makes your tax year-end far easier to deal with.
We’ve highlighted 5 key ways that Xero and cloud accounting remove the hassle of your tax year-end.
Hands up if you run your accounts from an Excel spreadsheet?
In the digital age, there are plenty of options for managing your sole trader finances that don’t rely on Excel. Using Xero moves you away from spreadsheets, scraps of paper and guessing at your financial position and gets you in proper control of your financial destiny.
With a cloud accounting system:
Keeping up to date with bookkeeping and financial admin tasks can be a challenge for a busy freelancer.
Xero has a mobile app that can be used on any iOS or Android device. That means you can log your expenses and costs as they occur and keep them recorded in a central place, meaning all your numbers are accounted for, backed up and secure.
With Xero on your mobile device:
Keeping track of every expense over the whole year is tricky without the right record system.
Instead of keeping all your coffee and food receipts in a shoebox (yes, some people still do this!), with Xero you can easily scan your receipts in from a mobile phone app.
With Xero as your document storage solution:
Xero works in the cloud, so you can invite your accountant to access your Xero accounts – giving them a real-time view of your finances from wherever you both are in the world.
With simple access to your Xero numbers at any time, your accountant can easily keep an eye on your income and profits and calculate your exposure to tax – making tax planning advice more efficient and keeping you on top of the tax you’ll need to pay.
With instant cloud access:
HMRC is in the process of moving every UK business over to digital tax accounts, with an initiative known as ‘Making Tax Digital’.
Making Tax Digital (MTD) means submitting your tax return digitally, and will hit VAT-registered businesses with turnover over the VAT threshold in 2019. But the current intention is that all UK businesses (including sole traders and freelancers) will submit their tax return digitally by 2020.
With a Xero online accounting system:
If you’re looking to make your year-end and income tax return as straightforward and simple as possible, there’s real value to moving your freelance financial management over to Xero.
Not only do you get a efficient online way to manage your finances, you also reduce your bookkeeping workload and make tax year-end a more manageable task.
Xero also has a huge resource of small business guides that will help you refine, improve and grow your sole trader business too.
Get in control of your finances with Xero’s free guides for business ownersStart improving your business