Why I regretted not thinking about tax from day one

 

Overview:
The challenge:  Eight months into starting Launchlab, me and my partner James got our first tax bill. It took us a little by surprise and was a fairly arbitrary figure HMRC had seemingly calculated on the assumption we'd made sales of 'x', incurred overheads of 'x' and made a profit of 'x'. Until then, we hadn't really thought about tax other than to ensure we shoved all our receipts and invoices into a shoebox on the assumption we'd deal with it down the line.
When you're first starting up the last thing you think about is getting your tax in order - certainly not when you're still researching your idea, perfecting your model, getting people interested. Unless you're a naturally organised person - which I'm not - it's just not a high priority.
All of sudden though we had a tax bill we wanted to challenge, a lot of quite official documentation to complete and we weren't in shape at all.
The solution: Get organised. We'd actually bought some accounting software right at the start but hadn't even taken it out of the box. We had no choice but to sit and wade through eight months of receipts in one go, which took ages and wasn't fun! As soon as we'd done it though we were able access information so much easier and the software made life so much easier.
We also took advice from our accountant and ran everything past him to ensure our books were fully in order.
Key lesson:  Clearly we should have listened and got organised from the start because now we are, the whole tax thing is actually a bit of a breeze. We underestimated the level of correspondence and documentation that comes with tax, though - nothing is that challenging and fairly straightforward now we know what we're doing and are in good shape.
Top tip:
I've three: get a good accountant and listen to them; get some good accounting software installed; and set yourself a simple but organised filing system from day one. It might not seem a priority or particularly exciting but it'll save you a lot of time and hassle later on when, actually, your business really needs your focus.Overviewo

Overview

Tax wasn't a priority for us when starting-up. With hindsight though I wish we had been more organised as it'd have saved time in the long run.

The challenge

Eight months into starting Launchlab, me and my partner James got our first tax bill. It took us a little by surprise and was a fairly arbitrary figure HMRC had seemingly calculated on the assumption we'd made sales of 'x', incurred overheads of 'x' and made a profit of 'x'.

Until then, we hadn't really thought about tax other than to ensure we shoved all our receipts and invoices into a shoebox on the assumption we'd deal with it down the line.

When you're first starting up the last thing you think about is getting your tax in order - certainly not when you're still researching your idea, perfecting your model, getting people interested. Unless you're a naturally organised person - which I'm not - it's just not a high priority.

All of sudden though we had a tax bill we needed to challenge, a lot of quite official documentation to complete and we weren't in shape at all.

The solution

We simply had to get organised - and quick. We'd actually bought some accounting software right at the start but hadn't got as far as taking it out of the box. We had no choice but to sit and wade through eight months of receipts in one go, which took ages and wasn't fun!

As soon as we'd done it and established a proper filing system though we were able to access information so much easier.

We also took advice from our accountant and ran everything past him to ensure our books were fully in order.

Key lesson

Clearly, we should have listened and got organised from the start because now we are, the whole tax thing is actually a bit of a breeze.

We underestimated the level of correspondence and documentation that comes with tax, though - nothing is that challenging but it's a nightmare if you don't have the figures and documents to hand.

Top tip

I've three: get a good accountant and listen to them; get some good accounting software installed; and set yourself a simple but organised filing system from day one.

It might not seem a priority or particularly exciting but it'll save you a lot of time and hassle later on when, actually, your business really needs your focus.

 

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