Improving your personal finances is one resolution that is worth keeping. Not least because it could help you to save money, particularly when it comes to self-employment and taxes.
It’s estimated that some dentists are paying around 10% too much tax through a combination of not controlling their financial affairs tightly enough and receiving poor advice.
Below are five tips that will not only ensure you don’t miss out on income that belongs to you, but will also make managing your tax obligations less stressful:
Get to grips with the tax system
Your tax return should be made up to the 5th of April each year and needs to be paid by the following January. The amount of tax you pay is based on your profits which are compiled based on your income minus your business expenses. Dentists making the move to self-employment can find this a learning curve – especially as, in the case of new associates, there can be up to 22 months between starting the role and filing their first return.
Appoint a specialist dental accountant
As a dentist no one expects you to be an authority in taxes, so why not take advantage of those who do have that expert knowledge? A specialist accountant can help you with things such as planning tax liabilities, understanding what financial records you need to keep, ensuring you don’t miss tax deadlines and advising you on any tax relief that may be available.
Keep detailed and accurate records
Maintaining comprehensive and up-to-date records will give you a clear picture of where you stand, enabling you to manage, spend and invest your money more wisely. You should also make sure your records include pension contributions and gift aid donations, as these are required in your tax return. For tax purposes, financial records relating to your income, earnings and business expenditure must be kept for seven years.
Know which expenses are tax deductible
If you don’t know which job-related expenses you can claim for, you could end up over-paying on your tax. If you are self-employed, you can claim tax relief on expenses such as professional membership fees and subscriptions (BMA, GDC, etc), tools and specialist dental equipment, and sales and marketing materials such as business cards. You can also claim for business mileage or fuel, excluding commuting to your normal place of work.
Spread the cost of paying your tax
Paying your tax in one lump sum by the self-assessment deadlines can cause you to worry about the impact on your personal finances. Some finance providers offer funding and other solutions that enable you to preserve cash flow without compromising existing banking lines. You can also spread the cost of tax liabilities over six or 12 months by using an unsecured loan facility.
Following the above steps and taking a proactive approach to financial management will support you to have a more prosperous 2018. Enlisting the help of specialist lenders to the dental sector will also help to ease the way.
For example, Wesleyan Bank offer step-by-step support to assist dentists at every stage of their careers, with tailored solutions including asset finance to support investment in new equipment and technology, as well as long-term loans for acquiring a dental practice, partner buy-in/outs and commercial mortgages.
For advice and further information about self-assessment tax returns, click here.
