I’ve been doing it for two decades now and although I’ve always been diligent about record keeping (I have receipts for everything), it’s still one of those processes that I dread creeping up on me towards the end of the calendar.
Inevitably, I always wonder what it’ll all end up costing me.
Matters are slightly complicated for me, because as well as being a private individual, I’m also a Limited Company.
It makes me a company director – the company director effectively – and in turn, it means more bookkeeping, paper chasing and spreadsheet completion.
Of course, it’s all completely normal and I could do it all myself, but I like having the safety net of accountants looking over my workings and keeping my dealings in line with the latest HMRC regulations.
Just as with many other companies, keeping on the right side of things has been a tough task for the past couple of years, and for small businesses across the country I’m certain that things will never be quite the same again. We all know the general cost of living is going to go up – when has it ever fallen? – but by how much overall?
And what about the costs for small businesses with small workforces, or owner-operators?
I noticed a sharp increase in my use of energy since lockdown was first imposed and the costs are about to rocket up.
Clients are loathe to accept any increase in prices, so it’s the small business owner who is getting squeezed from both sides simultaneously.
In effectively owning my own limited company, there was no government support available to me or others in a similar situation during the pandemic, other than to take on debt.
Instead, I adopted something of a scorched earth policy, stripped back my costs where I could and tried to ride things out.
And each year, through compiling my accounts, I’ve been able to monitor the effects. Strangely perhaps, going back over the past trading year has provided an almost cathartic exercise.
My tax year 2020-2021 has shown the almost instant dropping off of business and with it, therefore, income.
Some of my costs also went down considerably as lockdown began just over a week before the start of the financial year.
At that time I was filling up my car with petrol two or three times a week; instantly it became once every couple of months instead, as most of my output was put together at home and my use of transport ceased almost completely.
My energy usage surged past previous levels, of course, with predictable results financially.
I had to buy equipment to be able to be productive, but mercifully it didn’t cost the earth and was tax-deductible.
That equipment has paid for itself quite a few times over since 2020 and will need replacing before long. Most of all though, I kept working and took on more outside work, which was a lifesaver.
One pleasure has arisen in doing my annual accounts, and it has nothing to do with profits and losses.
Instead, trolling through my receipts and statements has given me a kind of commentary on the year I spent both privately and commercially after the pandemic began.
Receipts tell their own story of where I went and what I did, and even if not tax deductible, they help with fleshing out that story.
The numbers don’t lie, but who would have thought they would also write the diary of my year?