Let’s face it, no one goes into business to become a tax expert. But whether you’re a sole trader or running a limited company, understanding how tax works can be the difference between sleeping well at night or scrambling to find cash when the bill lands.

At Carthy Accountants, we see it time and time again: business owners making the same tax mistake.

The Mistake? Not Planning Ahead.

The most common tax mistake business owners make isn’t about a missed deadline or incorrect number. It’s about failing to plan ahead, both in terms of cash flow and tax-saving opportunities.

As Lucy explains in our latest Business Success Conversation, planning your tax bill starts long before the end of your financial year. It includes simple things like setting up a separate savings pot for tax and having pre-year-end conversations with your accountant.

So many clients have one bank account, and we recommend splitting them out into pots. That £240 invoice you’ve just banked? £40 goes to VAT, and £38 might go to Corporation Tax. It’s not all yours.

Why Separate Accounts Are Essential

Mixing personal and business expenses is another common trap, especially for sole traders and small limited companies. Whether it’s using personal credit cards for business costs or dipping into the company account for holidays or school fees, it blurs the line and creates confusion at year-end.

This leads to another issue: overdrawn Director’s Loan Accounts (DLAs). Lucy breaks it down clearly:

A DLA is like a current account between you and your business. If it’s overdrawn, and you don’t have the profits to clear it with dividends, you’ll end up with extra tax liabilities.

What Happens If You Don’t Save?

Let’s be real. If you haven’t saved throughout the year, and that tax bill arrives, you’re in a tight spot. HMRC doesn’t just want the money. They’ll add interest and penalties if you're late paying.

And if you're a sole trader, you might also face payments on account, advance payments toward next year’s tax bill, which often catch new business owners off guard.

How Carthy Accountants Help You Stay Ahead

At Carthy Accountants, we take a proactive approach. We won’t just give you the bill, we’ll help you plan for it.

• Regular reminders and email summaries of what you owe
• Simple breakdowns with payment references and due dates
• Pre-year-end planning sessions to spot tax-saving opportunities
• Ongoing advice to help your business support your personal lifestyle, not the other way around

Because ultimately, it’s not just about tax. It’s about helping you build the life and business you want.

Get the Business You Want

Avoiding surprise tax bills starts with forward planning. Whether you’re running a limited company or just starting out, we’ll help you understand what’s coming, and what you can do about it.

Want to stay ahead of your tax obligations, avoid penalties, and build a business that supports your life?

Get in touch with Carthy Accountants today.
Helping you get the business you want.