How much? What to do when you get a big, unexpected tax bill

Your accountant has just finished your personal tax return.

The nasty surprise is that you have an eye-watering tax bill to pay by 31 January. You were expecting to pay something. You have a vague memory of your accountant mentioning last year that you should put some money aside to cover the tax bill. But you didn't quite get around to it.

It's been an expensive year. There was that 'once in a lifetime' holiday, new iPads and phones for the kids, Christmas was expensive. You have no savings. And now this.

Accountants don't like this time. Inevitably they will be giving bad news to some of their clients and sometimes it is not well received. Their clients sometimes mention 'Joe down the pub' whose accountant always gets him a refund. How does that happen? Well if Joe is making losses every year, or buys expensive assets in his business or if he works in construction and has tax deducted at source, he may well get a refund every year.

On the other hand, if he is self employed with a growing, profitable business or has other untaxed income like a buy to let portfolio, the consequence will usually be tax. If he tips into 'higher rate' or 'additional rate' tax territory, the tax bill might be very significant indeed.

Well what's to be done? Well after the initial shock and anger...'Why me?', it's time to think practically. What can you afford to pay over the next 6 months? If you are open and honest with the taxman and present a payment plan you can stick to, generally they will strike a deal.

When you have a plan to pay this year's bill sorted, now is the time to start planing for next year. Being surprised one year is unfortunate. Being surprised the next year is just bad planning.

Talk to your accountant about how you can minimise your tax bill. Is your business structure appropriate? Can you make use of your spouse's personal allowance and lower tax thresholds more effectively? Make the changes now.

And most importantly, set some money aside every month for your next tax bill. Set up a savings account, transfer the money every month and don't touch it until your next tax bill is due.

Paying a big tax bill is never pleasant but if you are prepared and have the funds available, the pain is much reduced.

I hope your tax season has gone well. In just a couple of months it's the end of this tax year and the cycle starts again.

It's in your hands to be prepared this time...

www.base52.co.uk

Stop - Review - Improve. Repeat

Life is busy.

We all do lots of things. Small tasks, bigger activities and major projects. We get them done and then move onto the next thing.

But what about getting better at what we do? Do we stop and take time every now and then to review what we have done and see if we can improve things?

The US Military are big advocates of this. 'After action reviews' started as informal reviews by small groups after they completed an action or activity. This developed into a formal process and is now embedded into their way of working. Businesses have also been using similar processes for many years and it is a powerful tool for driving change and improving effectiveness.

Business gurus Ron Baker and Ed Kless give a template for After Action Reviews (AARs) in their brilliant book about business best practice, 'Soul of Enterprise'.

Some principles are:

• The review should take place soon after an activity is complete (initially the US military would carry these out straight after an action, in situ)
• Key people involved should take part
• It shouldn't be a major exercise. 15 minutes is typical for a relatively small activity
• Start with the objectives. Why were we doing this?
• Let junior members of the team contribute first.
• Everything is 'on the table' and can be challenged
• Encourage people to prepare. Bring along 3 things that went well and 3 things which could have gone better. Think about why they went well or didn't
• Have someone to facilitate and take notes if possible
• About half of the meeting time should be about what will be done differently in future

An accountant's life is full of task, projects and deadlines. There is lots of scope for AARs to drive improvement.

We are currently close to the completion deadline for one of our biggest projects of the year - completing self assessment tax returns for over 300 clients. It's going reasonably well but we still have lots to do.

We already have our AAR scheduled for soon after the last tax return is filed

Within a couple of months the new tax year starts and the cycle continues. Hopefully our AAR will help us take the learnings from this year and make the process even better next time. We will certainly be trying to make that happen.

www.base52.co.uk

5 tips to save time (Not reading this blog isn't one of them)

You can't buy time.

Mega rich Warren Buffet knows this and he protects his time fiercely. There's a YouTube video of him chatting with Bill Gates about this. Bill is amazed that Warren's 'old school' paper calendar is practically empty. He needs his time for thinking and making decisions. Lots of meetings and appointments won't help with this so he avoids them. You can't argue that it hasn't worked for him.

I've been busier than usual lately and it forced me to think carefully about how I manage my time. I re-read Tim Ferris's, '4 hour work week' for inspiration and changed some of my working habits. I'm a long way from a 4 hour week but I have become a bit more productive

Here are some of the things which have worked for me:

1. Chunk your week

Break your week up into time slots where you do specific things. For example - client work in the mornings, sales calls in the afternoons, admin and queries on Mondays etc

2. Shut out all distractions

If you have time blocked out for a purpose, do that and don't get distracted by email, social media, phone calls etc. Let your phone go to voicemail and check email at set times during the day rather than being, ' Always on'. Tim Ferris takes not checking his emails to further extremes - checking only weekly or even monthly if he is travelling. Only one or two time slots a day is a good starting point.

3. Say no

We all want to please. Say yes to that lunch with the nice chap trying to sell you a photocopier, say yes to being on that new committee, yes to that meeting that someone else thinks you really should attend. No wonder our calendars get full. Before saying yes to an appointment a good test is, 'if this were tomorrow or the day after and not in two weeks time, would I still want to do it?'. If you find yourself hesitating you should probably (politely but firmly) say no.

4. Don't be too ambitious

We all have long lists. For business owners, the list is endless. There is always something you can do to make the business better. So we have a tendency to be ambitious with our lists. 'I'm going to get these 10 things done before lunch, then grab a sandwich, prep for that meeting, do the meeting and then finish off some other stuff'. We end up doing only half of it (often not very well) and leaving the office frazzled and exhausted. If you have just 2 or 3 'must do' things rather than a massive list you are less likely to be disappointed and can feel satisfied with a day well spent.

5. Have some chill out time

It's good to make some time during the working day to chill out a little. Whether that's a morning run, a lunchtime walk or a short break in between tasks, it's important to manage our own stress. Like Warren Buffet, have those little gaps (in his case big gaps) where there is nothing scheduled and you can think or take some time out.

I hope these tips help a little if you are feeling super busy and overwhelmed. A final thought is when you have finished your important but not too ambitious activity list, if you're the boss, why not call it a day? You don't need to stay every day until you have done your allotted hours.

Tim Ferris managed to get down to 4 hours a week. Most of us might not get there but a 40 hour week would be nice, right?

Let's finish with a quote from the great man, Warren Buffet, 'I really like my life. I’ve arranged my life so that I can do what I want'.

Now that's time management. 


www.base52.co.uk