Sole trading has emerged as a popular business option in the UK recently. According to statistics, there are 5.6 million private sector businesses, with 3.2 million being sole proprietorships. The number of sole traders is rapidly increasing in the UK. Despite the positive outlook presented by these statistics, the dedication and efforts that sole traders invest are noteworthy. This is where the significance of Accountants For Sole Traders comes into play
What is a sole trader?
Before we begin, let’s be aware of the meaning of the word “sole trader” is. Accountants For Sole Traders is the person who is running an entire company, which could also be referred to as self-employment. One person is wearing many hats, including the owner of the business, the leader, accountant, the sales manager, marketing manager and any other hat necessary to run a company.
This person will get all Profits from business after having paid tax. This is the reason why sole trading is unique. But, they are also responsible for any loss and are responsible for the burden on their own.
Sole traders are among the most straightforward business structures available in UK. It comes with its own tax rules that are set by HMRC and requires a specialized sole trader accountants to make sure they comply with all regulations.
Does a sole trader need an accountant?
So, a sole-trader is in charge of every aspect that they run their company, which can make them tired sometimes. Additionally, If the individual has a problem with numbers, there are many chances of making mistakes when working and they aren’t able to afford to make mistakes. It’s one of the main reasons to hire an accountant who is specialized.
You’ve probably heard that those accountants who work for sole trader offer customized services for sole traders and this is a particular area that they are experts in. Giving them the task can bring a sense of peace for sole trader owners. They can concentrate in other areas of their work without rushing at the computer.
There are additional benefits of employing accountant for sole traders who is expert in filling tax returns. Are you planning to start sole proprietorship? ensure you study this complete article.
1.Get the basics right
With the internet in your hands, you can know everything about starting the business , but what about the taxes part and the business jargon you aren’t aware of or familiar with?
Internet has enabled any kind of information easily accessible however, it can be confusing and could confuse anyone who is new to this area. If you’re trying to understand the basics right and get your finances correct, you’ll need a seasoned accountant. There’s a particular process to get you set up to be a sole-trader.
Thus, seeking help from an experienced accountant is crucial. They can handle the business’s setup as per HMRC regulations.
2.Recording the money
After you’ve completed the basics and you are ready to move on to the business. The flow of cash is essential to manage and growing a business.
It is essential to record the cash outflow and inflow accurately. There are two options for recording transactions: accumulation and the cash.
With the cash method you keep track of transactions once cash is received or paid, while with the accrual method it is recorded whenever they occur.
There is a method that you can choose to use for standard accounting, and the other to calculate VAT only. This may sound complicated however, it could bring benefits for cash flow advantages if you provide an extended credit period for customers.
A single mistake on the tax filing could lead to massive penalties. This isn’t something companies can afford.
In addition Taxes must be filed prior to the timeframe that is set by the government or else you’ll be fined.
While you attempt to keep track of all the transactions, submitting taxes will not be simple. It is important to understand that tax is a tangled topic as well. UK includes one of the tax laws with the longest length around the globe. Accountants have to learn for years these tax rules and working more work to comply with the HMRC regulations.
They are professionals who have an understanding of what they should do and not to do. Making the investment in an sole trader accountant service is the most efficient and the most convenient method to get your taxes completed.
3.No need to research terms
Understanding certain terms and financial documentation It can be a hassle and time-consuming process and difficult if you do not come financially savvy. You have to do ample research.
An accountant is acquainted with these terms and documents. They can complete the forms in a short time and help you comprehend these terms with no amount of study.
Tasks sole trader accountant will do for you
An accountant can help the sole trader with various tasks. If you hire one right when you start the business, they will guide you through different situations.
1.Self-assessment tax return
You must file a tax return you earn more than £1,000 during the tax year. You need to sign up with HMRC to self-assessment, get a UTR for your business, create profits and loss workings as well as calculate deductions and submit your tax return before the deadline. A sole trader accountant will assist you in the registration process and after a fiscal year is finished the accountant will file your taxes for you without worrying about the tax. HMRC has deadlines for filing these taxes and you must adhere to them completely.
2.Contribute to national insurance
Self-employed, like employed people or sole traders can also contribute in the National Insurance. There are two kinds of National Insurance Certificates: Class 2 NIC and class 4 National Insurance Card.
- Class 2 NIC – A sole trader is required to pay £3.05 per week when they earn more than £6,515 in their tax-year.
- Class 4 NIC: A sole trader is liable for 9 percent of their earnings per year between £9,568 to £50,270 plus an additional 2% when they reach the profit threshold.
3.VAT
The threshold for VAT registration by 2022 for the UK is £85,000. Businesses that have annual vatable supplies above this amount must apply for VAT.
However, How to calculate the VAT Which method should you use to calculate VAT accounting- accrual or cash, and what documents should you keep for the business is VAT registered and are there VAT schemes you could join? What are the best ways to plan VAT?
4.Bookkeeping
As a business owner, you have to see whether you are making a profit or incurring a loss. The books need to be adequately maintained to file taxes with ease.
A certified accountant will assist you with bookkeeping. They can help with everything from logging transactions to making balance sheets and tax filing. You can sit back and relax while letting them work.
Aside from that the accountant can assist you with
- Pricing your products correctly and accurately with taxes
- Assistance with budgeting
- Making grant proposals and preparing the application for funding
- Identifying which products make profits and which ones are a losing money
- Management of inventory
- Fixed Asset Management
- Payroll is a must if you employ employees
How to choose the right accountant?
Finding the right accountant is crucial for the success of your business. Be aware that anyone can claim to identify themselves as an accountant, but it isn’t legally protected. Always choose an certified accountant with valid credentials to handle your sole accounting for your business.
The price is crucial, but don’t choose a product that is cheap, the price-quality relationship is vital. Make sure you do your research thoroughly. With everything online it is possible to search for testimonials, references and move on ahead to step. Be aware that you require someone who has worked as sole trader accountants to be able to comprehend your business the best way.
