Blogging is rarely a form of employment that comes under contract. As a result, most of you reading this will have found yourself staring down the barrel of a tax return form at some point in the past. If not, you will be facing one in the near future.
But here’s the rub.
Most of us don’t have a clue how to handle our own finances. Bloggers are creative minds, born to change the world one word at a time, not experts in managing accounts — well, unless you’re a finance blogger or a chartered accountant on the side, that is.
But, mismanagement of your finances can have serious and far-reaching consequences. The government doesn’t care if you’ve never dealt with business accounts before. If you’re self-employed, then you have to deal with self-employed tax: period.
Consequences of Poor Self-Employed Tax Management
This blog is designed to educate, not scare. Still, before we get onto how to manage your self-employed tax as a blogger, it’s important to understand why you have to do it in the first place.
Unfortunately, it’s not uncommon for bloggers — or any other type of self-employed individual — to neglect their finances until the last minute, and this can lead to problems
If you have failed to record your accounts properly, and aren’t sure exactly how much you made over the year, your tax returns are not going to be accurate.
Inaccurate tax returns, if discovered, can lead to legal consequences and penalties. You aren’t going to get done for fraud for a one-off tax blunder, but you’ll certainly feel the effects. HMRC will also be watching you very closely from that point onwards, meaning other mistakes will be met with more severe action.
But there are other consequences to poor self-employed tax management besides a scolding and a fine from HMRC.
If you don’t pay attention to your accounts until the end of the year, you won’t be able to take advantage of the savings you can make through expenses. There are plenty of deductibles out there available for freelancers and bloggers to claim on, but you can’t just reel them off the top of your head last-minute, slap them on your tax returns, and expect HMRC to take your word for it.
Without proper tax management practices, you’ll be unable to reclaim money that would have otherwise been yours.
Finally, you’ve got to consider the psychological impact of bad self-employed tax management.
Tax anxiety is no joke. Fear of making mistakes or incurring the wrath of HMRC can cause plenty of worrying thoughts and sleepless nights. These fears are based on the unknown, however, and if you take control, you take away the fear.
And that’s the aim of this article: to give you control over your finances and therefore reduce the chance that you’ll be filling out inaccurate returns or spending nights worrying about your tax forms.
How to Manage Your Self-Employed Tax
With a bit of forethought and planning, any blogger can have well-managed business finances. In this infographic, we explain nine steps to help you stay on top of your self-employed tax obligations.
Graphic thanks to RSAccountancy.co.uk
And that’s it.
Simply follow those steps and you’ll have accurate, well-managed business finances that can save you a bit of money on self-employed tax and keep you sleeping soundly at night.