Providing the correct information to self-assessment accountants is not just a legal obligation but a crucial step in managing your finances effectively and ensuring compliance with tax laws. Open communication with your accountant and maintaining well-organised financial records can lead to a smooth and accurate tax filing process. The information you provide must cover all the aspects of your business. Some of these include:
- Employee information
- Pensions
- Self-employment and partnership income
- Investment Income
- Capital transactions
EMPLOYEE INFORMATION
- Employee Names: The full names of all employees.
- Employee Addresses: The residential addresses of employees for correspondence purposes.
- Employee Tax Identification Numbers: Depending on your country, this could be a Social Security Number (SSN), National Insurance Number (NINO), or other tax identification numbers.
- Employment Start and End Dates: When employees started and, if applicable, terminated their employment during the tax year.
- Wage and Salary Details: The total wages, salaries, and bonuses paid to each employee during the tax year.
- Tax Withholdings: Information on income tax, social security contributions, and other withholdings from employees’ paychecks.
- Pension Contributions: Details of any pension contributions made by the employer and the employee.
- Benefits and Allowances: Information on any taxable benefits, perks, or allowances provided to employees.
- Expense Reimbursements: Details of any reimbursed expenses that are subject to taxation.
- Leave and Absence Records: Records of paid leave, sick leave, and other absences that may affect payroll calculations.
- Employment Status: Whether an employee is full-time, part-time, temporary, or a contractor.
- Employment Contracts: Copies of employment contracts, if necessary, for tax purposes.
- Payroll Reports: Relevant payroll reports that show the breakdown of wages, taxes, and other deductions for each employee.
- Any Changes in Employment Status: If any employees changed their employment status during the tax year (e.g., promoted, demoted, or changed roles), provide details about the changes.
- Documentation for Deductions: Any documentation related to deductions or credits claimed for employing certain categories of workers or expenses related to employees.
PENSIONS
- Pension Provider Details: Provide the name and contact information of your business’s pension provider(s). This includes any pension schemes or retirement plans offered to employees.
- Employee Pension Contributions: Share the total pension contributions deducted from each employee’s paycheck during the tax year. This information should be broken down by pay period.
- Employer Pension Contributions: Provide the total amount of pension contributions made by the employer on behalf of employees. This includes any mandatory employer contributions and any additional voluntary contributions made on behalf of employees.
- Pension Contributions Schemes: If you have multiple pension schemes for different groups of employees, provide the accountant with a breakdown of contributions made to each scheme.
- Pension Contributions Records: Maintain records of pension contributions, including dates and amounts, in case the accountant needs to verify the information.
- Tax Relief on Pension Contributions: In some countries, pension contributions may be eligible for tax relief or deductions. Provide information on any tax relief claimed on pension contributions.
- Pension Transfers: If there have been any pension transfers during the tax year, ensure the relevant details are shared with the accountant.
- Pension Contributions for Directors or Key Employees: If there are specific pension arrangements for directors or key employees, provide the relevant details to the accountant.
- Pension Taxation Limits: Some countries impose annual or lifetime limits on pension contributions that qualify for tax benefits. Ensure the contributions are within the allowable limits.
- Pension Payments: If any pension payments have been made to retirees during the tax year, provide the details of these payments.
SELF-EMPLOYMENT AND PARTNERSHIP INCOME
- Business Income: Provide a detailed breakdown of the total income generated by the self-employment or partnership business during the tax year. Include all sources of income, such as sales revenue, fees, commissions, or any other income streams.
- Business Expenses: Present a categorised list of all allowable business expenses incurred during the tax year. This may include expenses for supplies, equipment, rent, utilities, travel, advertising, professional services, and more.
- Self-Employment or Partnership Profits: Calculate the net profit for the business by subtracting total expenses from total income. This will be the taxable income for self-assessment purposes.
- Business Records: Keep well-organised records, receipts, and invoices to support the reported income and expenses. The accountant may request these documents for verification.
- Capital Allowances: If there are any capital assets used in the business (e.g., machinery, vehicles, computers), provide details of capital allowances and depreciation claimed.
- Partnership Agreements: If it’s a partnership, provide the partnership agreement and details of profit-sharing arrangements among partners.
- Partnership Income Allocation: In a partnership, provide the accountant with each partner’s individual share of profits or losses.
- Payment and Receipt Records: Provide information on the payment and receipt methods used for business transactions, such as bank statements or digital payment records.
- Foreign Income (if applicable): If you have income earned from foreign sources, disclose and provide details about this income.
- National Insurance Contributions: Share information about any National Insurance contributions made by self-employed individuals or partners.
- VAT (Value Added Tax) Information: If applicable, provide details of VAT registration, VAT collected, and VAT paid on business expenses.
- Any Changes in Business Structure: Inform the accountant of any business structure or ownership changes during the tax year.
- Business Mileage: If applicable, provide details of any business-related mileage for vehicles used in the business.
- Losses: If the business incurred losses during the tax year, provide information on how these losses are being carried forward or utilised.
- Other Income Sources: Apart from self-employment or partnership income, disclose any other sources of income you may have (e.g., rental income, investments).
INVESTMENT INCOME
- Investment Accounts: Share details of all investment accounts you hold, such as bank accounts, brokerage accounts, mutual funds, stocks, bonds, real estate investments, and any other income-generating investments.
- Dividend Income: Provide information on any dividends received from investments, including the names of companies or funds that paid the dividends and the amounts received.
- Interest Income: Disclose all interest earned on savings accounts, certificates of deposit (CDs), bonds, loans made, or other interest-bearing investments.
- Capital Gains and Losses: If you have sold any investments during the tax year, provide a record of the sales transactions, including the purchase and sale dates, the cost basis, and the selling price. This information will be used to calculate capital gains or losses.
- Rental Income: If you own rental properties, provide details of the rental income received during the tax year.
- Investment Expenses: Share a breakdown of any expenses related to managing your investments, such as brokerage fees, advisor fees, or expenses associated with rental properties.
- Foreign Income (if applicable): If you have earned investment income from foreign sources, provide details about this income.
- Tax Withholdings: If any tax withholdings were applied to your investment income at the source, provide documentation or details of these withholdings.
- Tax-Advantaged Accounts: If you have investments held in tax-advantaged accounts like Individual Retirement Accounts (IRAs) or 401(k)s, inform your accountant about these accounts and their contributions or distributions.
- Form 1099s and Tax Statements: Gather all relevant tax statements, such as Form 1099-DIV for dividends, Form 1099-INT for interest, and any other tax documents related to your investments.
- Depreciation (for rental properties): If you have rental properties, provide information on depreciation expenses related to those properties.
- Foreign Asset Reporting (if applicable): Some countries may require reporting of foreign assets held by taxpayers. If this applies to you, ensure you provide the necessary information.
- Charitable Donations (if applicable): If you made any charitable donations of investment assets, provide documentation for potential tax deductions.
Other Investment Income: Include any other sources of investment income not mentioned above.
CAPITAL TRANSACTIONS
- Purchase and Sale of Capital Assets: Provide details of any capital assets bought or sold during the tax year. This includes assets like real estate, stocks, bonds, mutual funds, vehicles, and other valuable properties.
- Date of Acquisition and Disposal: For each capital asset transaction, provide the date of acquisition (purchase) and the date of disposal (sale or transfer).
- Description of Assets: Include a description of each capital asset involved in the transaction, including any unique identifiers such as property addresses, stock ticker symbols, or serial numbers.
- Purchase and Sale Prices: Share each capital asset transaction’s purchase and sale prices. This information will be used to calculate capital gains or losses.
- Cost Basis: Provide the cost basis of each capital asset, which is the original purchase price adjusted for certain factors such as improvements or depreciation.
- Expenses and Fees: Include these details if any expenses or fees were associated with the capital transactions, such as brokerage fees or legal fees.
- Type of Transaction: Specify whether the transactions were purchases, sales, gifts, exchanges, or other types of capital asset transfers.
- Gifts or Inheritances: If you received any capital assets as gifts or through inheritance, provide the necessary documentation and information about the transfer.
- Investment Property: For real estate or other investment properties, provide income and expense details and information on any rental income received or expenses incurred.
- Foreign Transactions (if applicable): If any of the capital transactions involved assets located outside your country of residence, provide relevant details.
- Tax Withholdings: If there were any tax withholdings or taxes paid related to the capital transactions, provide documentation or details.
- Exchange of Like-Kind Property (1031 Exchange, if applicable): If you participated in a like-kind exchange of property under Section 1031 of the tax code (applicable in the United States), provide information about the exchange.
- Business Asset Transactions (if applicable): If you are a business owner, provide details of any capital asset transactions related to your business, such as equipment purchases or sales.
Remember to keep accurate and up-to-date records throughout the year to ensure a smooth and accurate self-assessment process. Clear and organised information will help your accountant properly assess your tax obligations and identify any tax-saving opportunities. If you’re unsure what information to provide, consult your accountant or tax advisor for personalised guidance.