3 things self-employed people need to know this leap year

2024 is destined to be an eventful year. There’s the Summer Olympics, the general election (yikes) and, of course, an extra day in February 😲 If you hadn’t guessed already, we’re talking about the leap year.

And because easy and understandable tax is our main personality trait, today we’re diving into what this magical month means for self-employed people 👇

1. HMRC doesn’t count a year as 365 days 

Yep, you read that right – Bon Voyage to everything you thought you knew 👋

Ok, perhaps that was a tad dramatic. But, you must be wondering by now, how many days are in a year, if not 365?! 😖

Well, HMRC calculate the tax year in months not days. In other words, they consider a year to be 12 months rather than 365 days.

Now, that we’ve established that HMRC have not created their own calendar nor has everything you’ve ever known been a lie, we can talk about what this leap year actually means for you. 

The answer is – not a lot 😌

The only people who should be paying attention, are those with a company whose financial year ends on the last day of February. 

For those of you to whom this applies – simply make sure your bookkeeping goes to the end of the month, regardless of what date it falls on in February. 

And, voila 🪄

2. Hip-hip-hooray for an extra day of pay 😏

We love being the bearer of good news, so self-employed people listen up, as this one’s for you👂

As you know, a leap year means an extra day. An extra day of sleep, an extra day of cooking and in some cases, an extra day of work 😒

But, it’s not all as bad as it sounds. The leap year also allows self-employed people to boost their bank accounts! 

How? Well, if you’re self-employed, you have an extra day in the month to earn income at your normal rate. 

Employed people, however, aren’t so lucky. The leap year means that employees who are paid a fixed annual rate will spend the day working for free – ouch! 😢

3. Check if your bookkeeping system can handle leap years 

Basic isn’t always better when it comes to bookkeeping 💔

If you use a basic bookkeeping system or a simple spreadsheet to manage your accounts, you’ll want to make sure that it recognises 29 February. 

Unfortunately, not all systems and spreadsheets do since this date only occurs during a leap year. 

But, the solution is simple! (Kind of ironic we know). For a stress-free leap year, make sure that your bookkeeping system and spreadsheets take into account the extra day. 

This may mean that you have to find more advanced software or manually figure it out, but you’ll thank yourself later 🙌

Look out for the leap 

As it turns out, leap years aren’t so scary after all. Especially with us by your side 🤭

And, if you’re looking for ways to better your bookkeeping, this (leap) year could be the best yet! Check out our handy bookkeeping tools and boss your business today 💪