There are few acronyms that can get a small business owner trembling in quite the same way as HMRC. But really, being ready should be a matter of course. It’s not hard, it just requires a planned and methodical approach.
The good news is, this doesn’t just stop HMRC slaps on the wrist, or even your midnight nerves: it also makes sound business sense which will boost growth and success.
Follow our 3 Step Process to Keeping HMRC Happy, and you’ll be happy too.
Tame the Paperwork Beast
The paperless office hasn’t truly appeared for many, but even if you’re doing well there, we bet you’ve got a digital paperwork monster instead. Tame the books and make sure that your systems are regularly updated.
If you can quickly and easily see which payments are outstanding, or what last month’s expenses were, then life is easier. Online bookkeeping software is your best buddy here. You can also satisfy any HMRC enquiries with the click of a button instead of a mad desk sort.
Key things that you want to get right to tame the paperwork beast are: making sure everything tallies (easy if you’ve got the software doing the sums), and that you’re keeping copies of all invoices and receipts.
Prevent Errors and Get Things Right
HMRC tend to pop up their head for the same errors over and over. If you can prevent the most common errors, and make your books look like the A-grade student’s, then you’re less likely to be flagged up for a closer look.
This means, you need to chuck out your crazy, convoluted systems that you fell into when you were a newbie start-up and more focused on growth than long-term success. Now that you’re established, and bigger, those systems (and your love of Excel spreadsheets) are more likely to get you in hot water than actually help you.
You can’t avoid every HMRC check – after all, many are simply spot checks and akin to having your name pulled out of a hat – but some are set in motion by the bods over at HMRC who use their software noses and experienced intelligence to identify any odd activity. Your activity will be seen as odd if it’s complicated. So make it simple by automating a load of it with bookkeeping software.
Don’t Be Late
It’s an obvious one, but still lands businesses with fines every year without fail – get your tax and VAT returns in to HMRC on time. Seriously: If you’re late you’re waving a red flag saying ‘Hey, come and look over here’, and you’re more likely to be investigated.
It might be the business monster-under-the-bed, but we assure you that avoidance is far worse than reality. If you’ve stayed on top of your bookkeeping and accounts then getting the returns in on time should be as easy as pie.
So settle those trembles, and accept your responsibilities with good grace. Doing so will pay off, with fewer knocks at the door from HMRC, and fewer sleepless nights for you.