Paying too much tax, missing key deadlines, or falling foul of HMRC rules — they’re all surprisingly common (and avoidable) problems we see among small businesses. Whether you’re a sole trader in Canterbury or a limited company in Ashford, understanding where things often go wrong can help you stay one step ahead.
Here are the top tax mistakes we see — and how you can avoid them.
1. Mixing Business and Personal Finances
Why it’s a problem:
Using the same bank account for business and personal spending creates messy records. It’s harder to track income and expenses — and can lead to missed deductions or incorrect returns.
How to avoid it:
Open a separate business bank account
Use a dedicated business credit or debit card
Keep all business-related expenses in one place
2. Missing Deadlines (and Paying Penalties)
Why it’s a problem:
HMRC penalties can be costly — and completely avoidable. Missed tax returns, VAT filings, or late payments quickly add up.
How to avoid it:
• Keep a tax calendar with all key deadlines
• Use accounting software with built-in reminders
• Work with an accountant who’ll keep you on track
💡 Tip: Self-Assessment is due 31st January. VAT and Corporation Tax dates vary depending on your year-end — check yours now!
3. Forgetting to Track All Expenses
Why it’s a problem:
If you don’t record every allowable expense, you’re probably paying more tax than you should. Commonly missed ones include mileage, home office costs, and subscriptions.
How to avoid it:
Log expenses in real time (using apps like Dext or Xero)
Save digital copies of receipts
Ask your accountant what you can and can’t claim
4. Not Setting Money Aside for Tax
Why it’s a problem:
Many small business owners get a nasty shock when their tax bill arrives — especially in their first few years. Not setting aside funds can cause serious cash flow issues.
How to avoid it:
Set aside 20–30% of your income for tax, depending on your business type
Use a separate “tax pot” account
Use forecasting tools to stay ahead
5. Poor Record Keeping
Why it’s a problem:
Without accurate records, you could struggle to file your return correctly, miss deductions, or trigger an HMRC investigation.
How to avoid it:
Use cloud accounting software like QuickBooks, Xero or FreeAgent
Reconcile accounts monthly, not just at year-end
Keep digital copies of all invoices and receipts (you’ll need them for 6 years)
6. Registering (or Not Registering) for VAT at the Wrong Time
Why it’s a problem:
Registering too early can cause admin overload. Waiting too long — or going over the threshold without realising — can land you in hot water with HMRC.
How to avoid it:
Monitor your rolling 12-month turnover
Register when you approach the £90,000 VAT threshold (as of 2024/25)
Get advice on whether voluntary registration could benefit your business
7. Trying to DIY When You’ve Outgrown It
Why it’s a problem:
Spreadsheets and Google searches only get you so far. As your business grows, so do your tax responsibilities — and mistakes get more costly.
How to avoid it:
Know when to bring in a professional accountant
Ask for help with tax planning, not just filing
Remember: proactive advice can often save you money
The Bottom Line: Good Tax Habits = Less Stress, More Savings
At Soldi Partners Accounting we work with small businesses across Kent to simplify their taxes and stay compliant — without the overwhelm. From bookkeeping support to year-round tax planning, we’re here to make sure you never face these common mistakes alone.
Need help avoiding these pitfalls? Let’s have a chat about how we can support your business.
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