How to Calculate Your Business Turnover for Your Self-Assessment Tax Return

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Calculating your business turnover for your self-assessment tax return is crucial.

Show too much and you’ll pay too much tax.  Show too little and you could face penalties.

Here’s how to get it right.

What is Business Turnover When You’re Self Employed

Business turnover means the income you earned across all your sources of income. 

This includes things like:

  • Cash payments from your customers;
  • Invoices paid by your customers;
  • Any money you were paid via online websites like eBay, Amazon, Shopify or your own Website.

Business turnover does not include money earned as interest or business loans.  These are dealt with in a different way.

Tax Tip: Use the Cash Basis

The easiest way to work out your business turnover is to use the cash basis. In other words, that’s everything you got paid.

It’s great for self-employed business owners because it means they only pay tax on the money they have actually been paid.

Check if you are eligible for the cash basis here.

If you’re ineligible for the cash basis, your business turnover will be made up of all the money you have been paid as well as any payments you are waiting for like:

  • Unpaid invoices;
  • Online payments that arrive after the end of the tax year.

Tax Tip: Prepare Your Figures to Match the Tax Year

The other trick to make things easier is to prepare your figures to match the tax year.

The tax year runs from 6 April to 5 April.

Calculating Your Business Income for your Self-Assessment Tax Return

Calculating your business income is much easier if you have everything you need ready before you get started.

So pull out everything you which contains details of your income. That’s things like:

  • Bank statements
  • Sales Invoices you sent to your customers
  • Monthly earnings statements in relation to online earnings eg: shopify, eBay or Amazon.

What to Do Next

To calculate your business turnover for your self assessment tax return you need to:

  1. Write down your accounting period;
  2. List out all your sources of income during your accounting period;
  3. Run through your paperwork and list out all income received during your accounting period;
  4. Find amounts you were paid that are net of charges, fees or other deductions;
  5. Find statements and documentation that relate to the amounts in #4;
  6. Note down all charges, fees or other deductions from the statements in #5;
  7. Add back all deductions and charges to the figures in #4 to show your gross business turnover (that means before any deductions).

Does Business Turnover Include VAT?

If you are VAT registered then you must not include any VAT you have charged in your business turnover.

That’s because when you are VAT registered, you are simply collecting VAT on behalf of HMRC. So VAT is not part of your earnings.

How to Make Calculating Business Turnover Easier

If you are fed up manually calculating your Business Turnover, then it may be time to switch to a bookkeeping app like Quickbooks.

These apps automatically connect to your business bank account, pulling details of the money you have been paid and adding it up on an ongoing basis.

Read my overview of Quickbooks Self-Employed

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