Usually when keeping records, sole traders are focussed purely on capturing things that will be tax deductible. This is a perfectly understandable perspective. However, although accounting records are necessary if you’re to eventually complete a robust tax return, that’s really a by-product - really their main purpose is to give you some useful information as you go along.
For example - you might capture the costs of all your tax-deductible travel and meals through the year. You’ll then include them in the costs you record on your tax return, to reduce your tax bill. Great. But maybe you might also look at the amounts and think - “How much?? I’m going to start cycling/taking a packed lunch in/whatever”.
That’s what accounting records are for. It’s nice to save tax on costs if you’ve incurred them and they’re tax deductible. There might be as much or more benefit, though, in reviewing and contemplating the records. As well as saving a few hundred pounds in tax for last year, you might save thousands of pounds of actual expenditure in future years.
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