Do you know the 5 tax mistakes small businesses make and how to avoid them?
When it comes to running a small business, managing tax can feel like a minefield. Between staying on top of deadlines, understanding what you can (and can’t) claim, and keeping accurate records, it’s easy to make mistakes. Unfortunately, these mistakes can be costly – both financially and in terms of stress.
At Coplow Business Support Ltd, we help small businesses in Clitheroe, the Ribble Valley and across Lancashire stay on top of their books so they can avoid common tax traps. In this blog, we’re highlighting the top five tax mistakes we see small businesses make – and how you can steer clear of them.
1. Not Keeping Accurate Records
This one tops the list for a reason. Inaccurate or missing records can cause huge issues when it comes to submitting your tax return. If you don’t have a clear log of income and expenses, you risk underreporting earnings or missing out on deductible costs.
What to do instead:
- Use cloud accounting software (like Xero or QuickBooks) to log transactions as they happen
- Keep digital copies of receipts and invoices
- Work with a bookkeeper who ensures your records are always up to date
Accurate records are your best defence in the event of an HMRC audit and will make tax time far less stressful.
2. Missing Deadlines
Whether it’s your self-assessment, VAT return or payroll filings, deadlines are critical. Miss one and you could face penalties, interest charges or other complications.
Top Tip:
- Add all your deadlines to your calendar (or better yet, let your bookkeeper track them!)
- Sign up for HMRC email reminders
- If you’re unsure what applies to your business, get support from a qualified professional
At Coplow, we provide clients with regular reminders and even handle submissions on their behalf – no more deadline dread.
3. Mixing Personal and Business Finances
This one’s especially common for sole traders and new business owners. Using your personal account for business transactions might seem easier at first, but it quickly leads to confusion and complications.
Why it matters:
- Makes bookkeeping and tax returns harder
- Increases the risk of missing deductible expenses or misreporting income
- Can raise red flags with HMRC if things look disorganised
How to fix it: Open a dedicated business bank account. It’s more professional, easier to manage, and makes life much simpler come tax time.
4. Not Claiming All Allowable Expenses
Many business owners end up paying more tax than they need to by not claiming everything they’re entitled to. From mileage and mobile phone use to office supplies and software subscriptions, the list of allowable expenses is longer than most people think.
Commonly missed expenses include:
- Business use of home
- Travel and accommodation for work
- Professional memberships and training
- Software and apps used for the business
Our advice: If in doubt, ask. We help clients identify every legitimate expense to ensure they’re not paying more tax than necessary.
5. Not Planning Ahead
Tax isn’t something you should think about once a year. Without proper planning, you might find yourself with an unexpected tax bill and no cash flow to cover it.
Avoid the shock by:
- Putting aside a percentage of income each month for tax
- Reviewing your financials quarterly (not just yearly)
- Working with a bookkeeper to forecast and prepare for key tax dates
Planning ahead can make a huge difference – and means fewer surprises down the line.
Bonus Mistake: Thinking Bookkeeping and Accounting Are the Same
Many people assume their accountant is handling their books. But bookkeeping and accounting are two different things. Your bookkeeper keeps your records organised, accurate and up-to-date – which makes your accountant’s job much easier (and often cheaper too).
At Coplow, we work hand-in-hand with both clients and their accountants to make tax as smooth and stress-free as possible.
Final Thoughts
Avoiding tax mistakes is all about staying organised, informed, and supported. The good news? You don’t have to do it alone. At Coplow Business Support Ltd, we specialise in helping small businesses in Clitheroe, the Ribble Valley and across Lancashire feel confident in their finances.
If tax season fills you with dread, it might be time for a chat. Let’s get your books in order and your business on track – so you can focus on what you do best.
Coplow Business Support Ltd – Your friendly, local bookkeeping partner in business growth.
Call us on 01200 407100 alternatively [email protected]
