Sole Trader Accounting
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Accountancy Services for Sole Traders
Affordable, fixed-price online accountancy services tailored for sole traders.
We offer a range of UK services, including company accounts, tax returns, VAT returns, bookkeeping, payroll, and self-assessments. Our approach is fresh, emphasizing high service levels and proactive advice.
Managing receipts and updating spreadsheets can be time-consuming. For a fixed monthly fee, take advantage of our all-inclusive accountancy service, which features unlimited support and proactive guidance.
Let's Talk
- contact@theaccountantpoint.co.uk
- +44 7840 100 078
Accountancy Services for Sole Traders
Our services include company accounts, tax returns, VAT returns, online bookkeeping, self-assessments, payroll, and more. We cater to sole traders, limited companies, partnerships, limited liability partnerships, small businesses, contractors, and individuals throughout the UK. Renowned for our all-inclusive unlimited service plan, we provide all necessary accounting services for UK businesses and more, all for a fixed monthly fee.
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Sole Trader Accounting FAQs
While it's not a legal requirement for sole traders to hire an accountant, there are several benefits to doing so.
Do I Legally Need an Accountant?
Contrary to popular belief, small businesses are not legally obligated to hire an accountant. Additionally, businesses meeting the following criteria are exempt from auditing:
- The business qualifies as "small" by meeting two of these criteria: a turnover of less than £6.5 million, an average employee count of fewer than 50, and a balance sheet total of less than £3.26 million.
- An audit is only required if a firm member requests it, provided they hold 10 percent of the share capital or 10 percent of all members for a company limited by guarantee.
Most businesses fall within this exemption.
Why Engage an Accountant?
Even though hiring an accountant is not mandatory, many sole traders choose to do so for various reasons.
An accountant's role extends beyond just compiling books at the end of the year and filing VAT returns. They also:
- Register the business with necessary tax departments such as VAT and PAYE.
- Establish and maintain company payroll, ensuring compliance with new RTI standards.
- Handle bookkeeping.
- Manage business correspondence with HMRC.
- Offer tax planning advice.
- Provide professional references.
Moreover, experienced accountants are well-versed in dealing with tax authorities, know the proper format for submitting information to HMRC, and are better equipped to handle tax inquiries if they arise.
Additional Points to Consider
If you decide to manage your finances independently, ensure your accounts adhere to Generally Accepted Accounting Practices, submit information accurately and on time, and meet the company’s statutory and financial obligations.
Compare the time spent on accounting, bookkeeping, and dealing with HMRC to the cost of hiring an accountant. If saving money is a priority, an accountant might help you save both time and money by allowing you to focus on running your business instead of managing numbers.
As a sole trader, it's crucial to determine the amount of tax you owe each year. This task becomes much simpler if you have a clear record of your income and expenses. Since you don't have taxes deducted regularly through a PAYE system, keeping accurate accounts helps ensure you don't inadvertently use up the funds needed to pay HMRC by January 31.
Additionally, tracking your spending and income as a sole trader can be highly advantageous. Having everything documented allows you to identify opportunities to increase your profit margins, such as changing suppliers or adjusting the prices of certain products or services.
By law, you must keep records of your income and expenses for five years after the January 31 tax filing deadline. It is essential to have these documents available if HMRC requests them. Here is a list of the necessary documents:
- Business Revenue: This includes all earnings from your services and sales.
- Personal Income: Any additional income from other sources, such as property and investments, that could affect your tax liability.
- Expenditure: Records of payments for items necessary to run your business efficiently.
- VAT Records: If your annual turnover exceeds the VAT threshold, you must register for VAT and keep these records for at least six years.
- PAYE (Pay As You Earn) Records: You can hire employees as a sole trader without forming a limited company, but you must track their salaries through HMRC’s PAYE system.
- Grants: Documentation of any funds received from grants.
Maintaining these records ensures compliance with legal requirements and helps manage your business finances effectively.
Sole traders are responsible for paying the following taxes:
- Income Tax: This is paid on your net earnings after accounting for Class 2 and Class 4 National Insurance (NI) contributions. Note that Class 2 NI contributions are set to be reformed and may be removed.
- VAT (Value Added Tax): If your annual turnover exceeds the VAT threshold, you must register for and pay VAT.