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When you’re self-employed, it’s your responsibility to manage all aspects of your taxes, including keeping records, filing tax returns, and paying any amounts due. One key part of this is submitting a self-assessment tax return each year to report your income. People sometimes refer to this as a “self-employment tax return,” but that’s not quite right. While the two terms are often used interchangeably, there isn’t really a “self-employment tax return.” It’s the self-assessment tax return that you need to use when reporting income to HMRC, whether from self-employment or any other untaxed sources. Now that we’ve cleared that up, let’s dive a bit deeper into what a self-assessment tax return involves. What is a Self-Assessment Tax Return? Self-assessment tax returns are an important part of the UK tax system. Each year, if you’re required to file one, you’ll report your earnings to HMRC. This includes any income from self-employment, making sure all your taxable income is included, along with any reliefs or deductions you’re entitled to claim. Based on this, HMRC calculates how much tax you owe and sends you a bill. Most people file their self-assessment online, which has a lot of advantages, but there’s also the option to do it on paper. It’s really important to file correctly and on time, as HMRC can issue hefty penalties for errors, inaccuracies, or late submissions. Even being one day late triggers an automatic £100 fine. If you need to register for self-assessment, the deadline is October 5th after the tax year you’re reporting for. The deadline to file is October 31st if you’re using a paper form, and January 31st for online returns. You also need to pay your tax bill by January 31st. Who Needs to File a Self-Assessment Tax Return? More than 12 million people in the UK are required to complete a self-assessment tax return each year, so it’s important to know if you’re one of them to stay on top of your tax obligations. You’ll generally need to file a self-assessment if any of the following apply to you: You’re self-employed and earn more than £1,000. You claim child benefit, and you or your partner earn over £60,000. You’re a partner in a business partnership. You earn taxable income from investments or savings above the £1,000 personal savings allowance. Your total taxable income exceeds £150,000. You receive over £10,000 in rental income or dividends. You made a capital gain above the tax-free capital gains allowance. If you’re not sure whether you need to file, HMRC offers an online tool to help you check. Tips For Successfully Completing Your Self-Assessment Tax Return Completing your self-assessment accurately and filing it on time can be challenging so here are some tips to make the process less onerous. Keep Meticulous and Organised Records Maintaining detailed and organized records of your business income and expenses is essential for accurately completing your self-assessment tax return. Staying on top of your bookkeeping and doing regular reconciliations can save you a lot of stress, as opposed to scrambling to get everything in order just before the filing deadline. In addition to maintaining good records, it’s important not to leave your self-assessment tax return to the last minute. Starting early gives you time to gather all the necessary documents and complete each section properly. Waiting until the deadline approaches increases the risk of errors, omissions, or even missing the deadline altogether, which could lead to fines and penalties from HMRC. Stay Updated on Tax Legislation Tax rules change frequently, including updates on deductions, reliefs, and rates. Keeping yourself informed about any legislative changes that may impact you ensures you remain compliant and don’t miss out on potential reliefs, which could result in you paying more tax than necessary. How an Accountant Can Help with Your Self-Assessment One of the easiest ways to make self-assessment stress-free and avoid errors or penalties is by working with an accountant. At Account-Ease, we specialize in self-assessment tax returns. As one of the UK’s most trusted accountancy firms, you can count on us to help you meet your tax obligations. If you’re a Account-Ease client, your annual self-assessment tax return is included in our accountancy packages. You’ll have a dedicated accountant managing both your personal and business finances, offering unlimited support and advice with a same-day response guarantee. We also conduct quarterly reviews to ensure you’re maximizing tax efficiency and increasing your take-home pay. For advice on your self-assessment or to learn more about our accounting services, call us at 0208 133 4599 or request a callback at your convenience.

Understanding the different methods of Directors Pay is crucial for maximizing earnings and effectively managing tax liabilities, both personally and for the company Salary: A salary is a routine payment provided by the company to a director and is the most prevalent form of compensation for directors. Advantages State pension years that qualify for it: Having a regular income that is greater than the earning limit of earnings means director earns qualifying years towards their state pension. Contributions to personal pensions: Allow for higher tax relief for personal pension contributions since your applicable UK income will be greater Income proof: A regular income may make it easier to bring the evidence needed to obtain loans or for insurance against critical illness. The eligibility for redundancy: Having been paid a salary could be a sign that director’s eligibility for redundancy payouts Disadvantages Income tax and NICs: Directors’ salaries are subject to income tax and National Insurance Contributions (NICs) Tax Rates and Considerations In the UK, the tax rates for different types of income vary: Bonus The term “bonus” refers to a single amount paid to directors. They may be annual or could be linked on the achievements of directors. They can be non-contractual or contractual. A contractual bonus implies that directors and employees are aware of their rights to receive a bonus. It is typically calculated on the performance. A contract might also provide the guarantee of a specific amount. A non-contractual reward is a situation where a company can decide how much a bonus is paid out and in what amount. Bonuses are tax-exempt and NICs when applicable. Dividends Dividends are the payments to shareholders using the company’s earnings. Directors who are shareholders may also receive dividends. Advantages Tax rates that are lower Tax rates for dividend income: The tax rate for dividends may be lower than that of income tax. There are no NICs No National Insurance contribution is due on dividends Dividend allowance The majority of people in the UK are entitled to an allowance for dividends, which payoff with tax-free income as high as PS500 per year. Disadvantages Reserves for distributable distribution Dividends are only able to be paid out of profits from the company and the company must be able to have enough reserves for distribution. Reimbursement of costs Costs paid directly through the director’s behalf on company can be reimbursed. Examples of personal expenses can include subsistence and travel as well as other equipment and services. Drawings Contrary to a sole trader business, a limited company an entirely separate business entity from its managers and owners. This means that, unlike the case of a sole trader company, you are not able to take any drawing. In the case of taking a payment from a restricted company that isn’t dividend, bonus or salary is declared as an unpaid loan to director. Directors loans must be managed in a manner that is appropriate to the situation.   How to select directors’ compensation Dividend vs salary Many factors impact the choice of the way a director will be paid. In general, directors of owned companies are paid an equal amount of salary. Dividends as well as bonuses in the most tax efficient manner. There are a few things to take into consideration when determining which is the perfect way to pay and the balance payment. Efficiency in taxation: Asking your accountant to create calculations can benefit you reduce your tax burden. The calculations could contain several different choices to think about and you can select the tax-efficient mode of payment. Financials for business: It is crucial to warrant the business has enough profits to pay dividends. And be able to pay for bonus and salary payouts. If your bonus and salary have wiped out company profits there could be no distribution reserve to pay dividends to shareholders. Personal circumstances: A different consideration is the personal situation of directors. For instance, they have financial targets, obligations and other sources of income. Taxable benefits in the form In in addition to bonuses, salary and dividends Directors may also be eligible for tax-deductible benefits. These may include company vehicles as well as medical insurance, fuel, and other advantages. Benefits that aren’t tax-free (such such as parking at work, mobile phones and beverages at the workplace) are subject to income tax as well as the NICs. Directors’ Pension As a director in a limited company, registering in a pension scheme for the company. Lets you plan for your future. Contributions to pensions made by the company are also an allowed expense for limited companies. Saving for a pension can be an excellent method to make money from your company that you’re happy to deposit into a retirement account which you can access upon retirement. What Account-Ease accountants can do to benefit Our experts are able to benefit you with regards to organizing your pay in the desirable way that suits the individual, taking into consideration your specific situation as well as tax efficiency. Contact our helpful team by giving us a call at 0208 133 4599 or fill out our on-line Contact form.

The services of an external accountant are a lifeline for around 91% of small businesses in the UK (source ICAEW), but does your limited company need to have one? There is no legal requirement for Accountant limited Company, but it is very beneficial. They can perform valuable services like filing annual accounts and corporation tax returns. They can also offer business advice and devise efficient strategies to save your company money. If you are not sure you need an accountant for your small business, please read on to find out how Account Ease can take hours of number crunching, form filling and box ticking off of your hands, and let you get back to running the business you love. What services can an accountant provide for my limited company? If you’ve ever wanted more time during the day, enlisting an competent accountant to handle your financial affairs is like taking the genie come out of bottles. In addition, there’s the potential for more than three wishes. Here’s a sample of a handful of the great services that accountants can provide the limited company. The process of setting up a new business Your accountant can benefit you register your company at Companies House if you wish to avoid hassle and time during the crucial formal days. They’ll also provide you with the facts about your new tax obligation and coordinate with the good folks at HMRC in relation to tax registration. Payroll For large corporations the payroll is usually run in-house. For smaller enterprises, it’s recommended to get this task for an accountant. You could also say goodbye to the hours of your day that are spent slogging through income taxes as well as HMRC paperwork. Luckily, accountants who are good can also be payroll experts who are awed by this sort of work (each for their personal reasons) VAT VAT – If these three letters make you feel with fear, you’re not alone. This can be a bit confusing and the rules are constantly changing. A professional accountant can benefit to navigate your business’s VAT obligations and select the most appropriate payment method to assure you don’t end up paying more than you should. They can also make easy tasks of annual VAT return in order to assure the company does not face sudden fees. Bookkeeping Bookkeeping for day-to-day activities is a cornerstone of effective managing finances. As it it can be tedious, time-consuming and boring It’s true. Invoicing every receipt could be a tedious task at the end of the year (or when HMRC is knocking) it is not a good idea to search to find missing receipts or transactions. We accountants are meticulous, and can manage your bookkeeping with utmost effectiveness, allowing you to free your time and energy. Cloud Accounting Software Day-to-day bookkeeping is the cornerstone of good financial management… and is time-consuming, dull and repetitive, let’s face it. . We frequently rant on about the advantages of software such as Xero however, with the right reasons. It will change the method of managing your accounts by speeding up the process and removing errors. Because everything is through the cloud you’ll always ensure that you’re viewing the most up-to-date data that can benefit in cash flow. Also, it makes year-end tax accounting easy and may eventually be mandatory to submit tax returns for corporations. If you’re still not in the game the software, your accountant will walk about the advantages and benefit you to get the excellent from the software that meets the requirements of your business. Pros of hiring an accountant If you are still weighing up the pros and cons of hiring an accountant for your limited company. It is worth calculating the hours you will save to work on your business rather than spreadsheet surfing and fiddling around with paperwork. Also, factor in the peace of mind you will gain. The comfort of avoiding tax investigations and penalties is enough to help any company director get a better night’s sleep! Finally, offset the reduced costs in potential tax savings and efficient cash flow forecasting. Consider the cost of hiring a skilled accountant in-house, and that’s another cost to cross off the list. That genie really doesn’t have anything on a reliable accountant (except perhaps for the outfit). When is the best time to get a limited company accountant? According to the old saying (almost) suggests it, the desirable moment to hire an accountant is right now and the accurate time to hire one is right today. A good accountant will provide value right from the start. Giving skillful guidance to help start your business off on the starting point. A lot of business owners seek out with a skillful as the year’s end rolls around. But it’s generally advisable to engage an accountant earlier. This way, your financials are in order and you’ll be aware of your tax obligations so that you don’t get unexpected expenses. Why choose Account Ease as my limited company accountant? You and your business deserve every chance to succeed, and the right accountant can give you the financial confidence you need to go forth and prosper. Account Ease has vast experience in accounting for small businesses. Our team are an approachable, friendly and professional bunch, so you can expect great customer service. We understand that not everyone is as excited about accounting as we are. So we cut through the jargon and aim to relieve the headache of fulfilling your financial responsibilities. Not only will we look after your limited company accounts like they were our own. But we will also be proactive in finding efficiencies to save you money.

With what could be the final budget before the general election, Chancellor of the Exchequer Jeremy Hunt today delivered his Spring Budget to. The House of Commons to announce the Government’s tax and spending plans. After lots of speculation over the last few days around tax cuts ahead of the forthcoming election. Reports suggested that several measures were being considered to raise money to fund this, including raising duty on flying first class. It was expected that further permanent cuts to National Insurance would be announced and potentially an income tax cut as well with Jeremy Hunt aiming to give “a message of hope in challenging times” and achieve heathy long-term economic growth, good public services as well as reducing taxes. Another big talking point ahead of the Spring Budget was the possibility of taxing vaping. As well as examining scrapping non-domiciled tax status, which the Treasury had declined to comment on. Additional decreases in National Insurance Contributions In response to the Autumn statement, additional measures to reduce taxes were announced. From the 6th of April, the Class 1 Employee National Insurance Contributions (£1) will be reduced by 2p from 10% to only 8%. The Class 4 National Security Contributions will be reduced from 8% to just 6% for those who are self-employed. This equates to a £450 annual saving for an average employee, and a £350 savings for a typical self-employed individual. Mandatory VAT Registration Threshold Increased The VAT registration threshold will be increased from £85,000 to £90,000 from 1st April 2024. This is the first time this threshold has increased in 7 years which will mean thousands of businesses will no longer be required to register for VAT. Permanent Expensing for Leased Assets The draft legislation to boost business investment will be introduced as soon it is affordable. Changes to Child Benefit The government is looking to reform the high-income child benefits charge in the future. It will change the system to one that applies to all households. Rather than the current system where the charge is applied if the household’s highest earner earns more than £50,000. The threshold for the high-income child benefit will begin at £60,000 in the interim and gradually increase to £80,000. The high income child benefit fee currently starts at £50,000, and is fully repaid when it reaches £60,000. Non-Domicile Tax Reform A rumoured change prior to the budget, the regime whereby individuals were able to avoid paying tax on their foreign income is to be scrapped. And replaced by a new residency based system from April 2025. Under the proposed new system, there would be no taxation on foreign income for individuals arriving in the. UK for the first four years after which regular UK residence taxation would apply. There will be a transition period for those currently utilising the “non-dom” system. Fuel And Alcohol Duty Frozen In good news for motorists, the Fuel duty freeze previously introduced in 2022 was temporary and fuel duty would have increased by 13% this month. But the Chancellor is maintaining the 5p cut for a third year and keeping it frozen for another 12 months. Alcohol duty was frozen in the Autumn statement and this freeze is now extended until February 2025 which will continue to cut costs for pubs, bars, restaurants, nightclubs and more. Changes for Landlords and Property Investors In news that could impact landlords and property investors. The multiple dwellings relief will be abolished for those that purchase multiple properties at once. The higher Capital Gains Tax rate on residential property will be reduced from 28% to 24%. With the aim of increasing the number of transactions to ultimately generate more revenue for the Government. The Furnished Holiday Lettings Relief scheme will also be abolished from April 2025. Other Key Points Include: £100m of levelling up funding to be allocated to support cultural and capital projects and community regeneration across the country NHS productivity plan to be funded in full at a cost of £6bn with a focus on reducing waiting times and improving service £200m will be provided to extend the recovery loan scheme to help small business and SMEs A new tax will be imposed on vapes, tobacco duty will increase and the tax on non-economy flights will increase Planned growth in day-to-day spending will be maintained at 1% in real terms Additional tax credits of 5% and a 40% tax relief for eligible film studios to boost the creative industry in the UK £105m to be invested over the next 4 years to build 50 new special free schools Guaranteed rates to be paid to childcare providers over the next 2 years as part of the Government’s boosted childcare offer to help more people into employment with 30 hours of free childcare being provided for working parents How Account Ease Accounting Can Help You As the UK’s most trusted accountants, our experts can help you make sense of the Spring Budget and how it could affect your business. Account Ease accountants are on-hand to answer any queries you have regarding the Budget, your accounting needs, tax-optimisation, and much more. If you need an accountant that you can trust with your finances, call us today on 0208 133 4599 or request a call back here.

The deadline for filing your 2022/23 self-assessment tax return online was 31st January 2024. The deadline for paper tax returns was 31st October 2023. In some very rare situations, HM Revenue & Customs (HMRC) may give you a different filing date for your tax return. But otherwise, it is not usually possible to get an extension to the filing deadline. Regardless of how you filed your tax return, any outstanding tax should have been paid by 31st January 2024. Interest will be charged on late payments after this date. What are the penalties for late tax returns? If HMRC asked you to complete a tax return for 2022/23 and you missed the deadline, you will automatically be fined regardless of whether you’re just one minute late or how small your tax liability is. Even if you are due a refund, a penalty would also normally apply. The penalties for filing your self-assessment tax return late are currently as follows: 1 day late – Automatic fixed penalty of £100. 3 months late – £10 per day up to a 90 maximum of £900. 6 months late – £300 or 5% of the tax due, whichever is higher. 12 months late – £300 or 5% of the tax due, whichever is higher. In serious cases, you may even be asked to pay up to 100% of the tax due instead. These penalties are in addition to one another, so the minimum late filing penalty for a tax return that is 12-months late will be upwards of £1,600 depending on the tax liability. Penalties for late payment of tax are: 30 days late – 5% of tax due Six months late – 5% of outstanding tax due at that date 12 months late – 5% of outstanding tax due at that date It is also important to bear in mind that interest will be charged on top of these penalties on the outstanding tax due, plus any outstanding penalties due. This is charged at a rate of 7.75%. My tax return is overdue, what should I do? Firstly, you need to consider if the tax return is required or if you have a legitimate reason for the delay: Cancelling a tax return You can use the ‘ask HMRC online’ option and speak to a webchat advisor or complete a form online. If HMRC agrees, you no do not need to file a return and any penalties issued for missing the deadline should be cancelled Remember to note down who you spoke to and when, what outcome is expected and when you will receive their decision. HMRC is unlikely to withdraw a return if you have been self-employed at any point during the tax year – even a very short time will count. Typically, you will only have two years from the end of the tax year for which the return is due to request its withdrawal, but it’s always better to deal with your tax affairs swiftly. Reasonable excuses If you have a good reason for the delay, you may be able to appeal against the penalty. HMRC lists several common examples of Reasonable Excuses on its website. These include: Your partner or another close relative died shortly before the tax return or payment deadline You had an unexpected stay in hospital that prevented you from dealing with your tax affairs You had a serious or life-threatening illness Your computer or software failed just before or while you were preparing your online return Service issues with HMRC online services What’s unlikely to be reasonable excuse? The following aren’t usually accepted as a reasonable excuse: you relied on someone else to send your return and they didn’t your cheque bounced or payment failed because you didn’t have enough money you found the HMRC online system too difficult to use you didn’t get a reminder from HMRC you made a mistake on your tax return If you’ve missed the deadline, file your tax return as quickly as possible If the tax return can’t be withdrawn and you don’t have a good excuse, the next best thing is to file your tax return as soon as is practical – even if you can’t afford your tax bill yet. As you’ve seen, the late filing penalties will increase the longer the delay. How long do I have to change my tax return? If you make a mistake on your tax return, you can amend it. To amend a tax return online you must make your changes within 12 months of the self-assessment deadline (by 31st January 2025 for a 2022/23 self-assessment tax return). After this deadline has passed, if you need to change your tax return, you’ll need to write to HMRC. Need more help? We love working with self-employed professionals and independent business owners and if you are not receiving the service and support you deserve from your accountant then please talk to us on 0208 133 4599or use our online enquiry form.

Running a successful sole trader business requires a lot of dedication and hard work. As a sole trader, you are responsible for all aspects of your business, including bookkeeping. While it may seem overwhelming, bookkeeping is an essential part of managing your business finances and ensuring compliance with tax laws. In this guide, we will explore the importance of bookkeeping for sole traders and provide practical tips on how to set up an effective bookkeeping system. Whether you’re a seasoned sole trader or just starting out, this guide will help you navigate the world of bookkeeping and make informed financial decisions for your business. Understanding the Importance of Bookkeeping for Sole Traders Bookkeeping is an essential aspect of running a successful sole trader business. Accurate bookkeeping provides a clear picture of your business finances. Without proper bookkeeping, it becomes challenging to track your business expenses and income accurately. As a result, you may miss out on potential tax deductions and overstate your profits. With accurate bookkeeping, you can analyze your financial data to make informed business decisions. Bookkeeping helps you keep track of your business expenses and income. By maintaining a detailed record of your expenses and income, you can easily monitor where your money is going and identify areas where you can save costs. This knowledge helps you optimize your spending and increase your profitability. Proper bookkeeping ensures compliance with tax laws and regulations. As a sole trader, you are responsible for reporting your income and expenses accurately to the tax authorities. Failing to do so can result in penalties and legal consequences. Bookkeeping allows you to maintain all the necessary records and documentation required for tax purposes. Without bookkeeping, it is difficult to make informed financial decisions. Bookkeeping provides you with up-to-date financial information, allowing you to evaluate your business’s performance and make strategic decisions. You can assess your cash flow, identify trends, and plan for future growth. Choosing the Right Bookkeeper for Your Business When it comes to bookkeeping for your sole trader business, it’s crucial to find a bookkeeper who can meet your specific needs. Here are some tips for choosing the right bookkeeper: Consider the qualifications and experience of potential bookkeepers Look for bookkeepers who have relevant qualifications and experience in working with sole traders. This ensures they understand the unique challenges and requirements of your business. Ask for referrals and check reviews Reach out to other sole traders or small business owners for recommendations on bookkeepers they trust. Additionally, check online reviews and testimonials to get a sense of a bookkeeper’s reputation. Choose a bookkeeper who understands your needs It’s important to select a bookkeeper who takes the time to understand your business goals and financial needs. This understanding will help them provide tailored bookkeeping services. Ensure the bookkeeper uses modern bookkeeping software and technologies Find out what bookkeeping software and technologies the bookkeeper utilizes. It’s essential to work with someone who keeps up with industry advancements to streamline your bookkeeping processes. Discuss pricing and payment terms Before finalizing your decision, have a conversation with potential bookkeepers about their pricing structure and payment terms. Make sure it aligns with your budget and preferences. Setting up an Effective Bookkeeping System When it comes to bookkeeping for sole traders, setting up an effective system is crucial for maintaining organized and accurate financial records. Here are some steps to help you establish a reliable bookkeeping system: Create a separate bank account for your business transactions:  Having a dedicated bank account for your business will make it easier to track expenses and income. Establish a consistent record-keeping system: Create a system for organizing invoices, receipts, and expenses. This could include using folders or digital folders to store and categorize your financial documents. Set up a digital or physical filing system: Choose whether you prefer to keep your records digitally or in physical files. Whichever option you choose, make sure it is organized and easy to access. Consider using cloud-based bookkeeping software: Cloud-based software offers the convenience of accessing your financial records from anywhere and provides automatic backup for data loss prevention. Implement regular backups: Regularly backup your bookkeeping files to a secure location to ensure you don’t lose any important data. By following these steps, you can establish a solid foundation for your bookkeeping system, making it easier to stay organized and maintain accurate financial records for your sole trader business. Organizing and Sorting Your Business Expenses Properly organizing and sorting your business expenses is crucial for accurate bookkeeping. Here are some tips to help you effectively manage your expenses: Categorize your business expenses into different expense types By categorizing your expenses, you can easily track and analyze your spending. Common expense categories include office supplies, travel expenses, utilities, and marketing expenses. Create a comprehensive list of expense categories that best reflect your business’s needs. Keep detailed records of each expense, including receipts and invoices It’s essential to have supporting documentation for every expense. Keep all receipts, invoices, and payment records organized and easily accessible. This will help you during tax season and provide proof of expenses if needed. Regularly review and reconcile your expense records to ensure accuracy Set aside time each month to review and reconcile your expense records. Check that all expenses are correctly categorized, and resolve any discrepancies or errors. This practice will help maintain accurate financial records. Consider using expense tracking tools or apps to simplify the process There are various expense tracking tools and apps available that can automate and simplify expense management. Find one that suits your business’s needs and integrates with your bookkeeping software for seamless data transfer. Consult with a bookkeeper to ensure you are correctly classifying your expenses If you’re uncertain about how to classify certain expenses, seek guidance from a professional bookkeeper. They can provide valuable insights and ensure your expenses are properly categorized for accurate financial reporting. Tracking and Recording Your Business Income Properly tracking and recording your business income is essential for maintaining accurate

Setting up as a sole trader is the most popular way of starting up a new business in the UK. It’s especially common amongst those going into business on their own for the first time. Starting your business as a sole trader has a number of advantages. These must be set against the disadvantages of the sole trader business model. The advantages of operating your business as a limited company. The positives about being a sole trader are: Full Control Being a sole-trader, you are in complete control of your company, and in the sense of ‘being your personal boss’. There is no need to consult with any other shareholders or directors, take note of their opinions, or alter your idea of what you want to achieve with the business. You are able to develop the business exactly in the way you want. Operational flexibility Since you are able to make your own choices on your own, it could be easy and fast to alter the company in order to adjust to changes in the market. For instance you could change the structure of your pricing or the services you offer by adding new products or eliminating those you don’t trust. This ability to make quick decisions and then implement them swiftly is an benefit when you are a sole-trader operating in an ever-changing, competitive market. In addition to acting as the only decision maker an individual trader will typically be in close contact with their clients. They are therefore able to be attentive to the requirements of their clients and their demands and able to respond swiftly and effectively to their needs. A few customers, particularly those seeking personal services might be turned off by the fact that it’s a small-sized company even if it’s passionate about customer service. This is especially true for local services, where a sole trader could gain trust and build confidence by relying on local roots and connections. A limited company, even if it is controlled by one person could appear unassuming and too corporate to certain. Easy and quick to start While forming a limited company is far easier that it used to be, setting up as a sole trader remains the quickest and simplest way to get your business up and running.t is not necessary to register your company through Companies House, therefore there are no Companies House forms to complete. There is a need to must inform HMRC that you are self-employed and running your business as sole trader. Low setup costs A lot of people use the services of a solicitor or a form agent to establish a limited-company (although it’s not difficult to begin a business by yourself). There’s generally less requirement for professional guidance in the event of becoming a self-employed sole trader. This means that these costs are lowered but not eliminated completely. There are no additional fees payable towards Companies House when setting out as sole trader. It is also unlikely that you will require any capital to get your company up. Running at the beginning however, it all will depend on the type of work your company will perform. In some industries, operating expenses are very excessive whatever the legal status of the company. Accounting simplified Accounting is easier for sole traders than for limited companies, and there’s no requirement for annual reports or an annual Corporation Tax return, although you’ll still have to keep the records of expenses and invoices. If you’re a sole trader, you have to file a self-assessment tax return that includes details of the earnings from trading you’ve conducted as sole trader. Since there’s less accounting tasks to do and your accountant could cost you lower than you would if were operating as a limited company. It’s easier to change your mind People starting out on their own in business for the first time often do so on a part-time basis. They may remain employed elsewhere so they retain the security of a salary. Many people dipping their toes into the water of running a business will choose to do so as a sole trader. This allows them to wait until they have more confidence in the business. Its ability to support them and their family before deciding whether a limited company might work better. With its less formal appearance, operating a separate business as a sole trader might also be easier to explain. Justify to your current employer than forming a limited company for the same purpose. If you start out as a sole trader, you can always choose to form a limited company for the business at a later point. If you form a limited company at the outset and later want to operate as a sole trader. You’ll have to go through a more formal process of closing the company first. The right business structure will depend on your individual circumstances. For many the advantages of a limited company will outweigh the potential benefits of operating as a sole trader. There are also disadvantages to operating as a sole trader, which you should consider. Professional advice from an independent professional who knows your circumstances. Such as your accountant or solicitor, is always useful if you’re unsure how best to set up a new business.

A Self Assessment tax return can look daunting. But if you’re prepared, organised and understand what you’re being asked for, it’s a lot simpler than it looks. Make sure you understand the form so you can file it correctly and avoid paying any penalties. Do I need to fill in a Self Assessment tax return? Yes, if: Your self-employment earnings were greater than £1,000 (before subtracting everything you are entitled to claim tax relief for) the rent you received from renting out your home exceeded £2,500 (you’ll be required to inform HMRC when it’s in between £1,000-£2,500) You made more than £2,500 in income that was not taxed, for instance from commissions or tips your your savings and investments was more than £10,000 or more prior to tax You are required to you must Capital Gains Tax on profits from the sale of items such as shares or even a second house you are a director in the company (unless it’s an non-profit organization like a charity) you or your partner’s earnings were greater than £50,000 and you’re entitled to Benefits for children. Benefit If you earn money from abroad that you have to pay tax on, or reside in another country but earn an income that is in the UK Your taxable income was greater than £100,000 If you earned more than £50,000 during the tax year and made pension contributions, you may have to submit an assessment in order in order to claim back the additional tax relief you’re entitled to you’re a trustee in an trust or a registered pension scheme Your State Pension was your sole source of income. It was greater that your individual allowance You received a letter from HMRC that said you didn’t pay tax enough the previous year. National Insurance contributions You can also file an Self Assessment tax return if you wish to make the voluntary class 2. National Insurance contributions. This will allow you to get benefits like state pensions. It is not necessary to submit the Self Assessment tax return if you’re an employee that has made tax payments through The Pay As You Earn (PAYE) program. This is the case unless you earn more than £100,000. How to register for a Self Assessment tax return If you’ve never filed returns before you’ll need to sign up to take the Self Assessment. There are a variety of methods to register if you’re self-employed, but not self-employed and must declare your income, or if you’re an association. After you’ve registered, you’ll be notified of the Unique Taxpayer Reference (UTR). If you’d like to complete the Self Assessment form online, you’ll need to create an account on the Government Gateway account. To set up this account follow the steps on the form that comes with your UTR. After you’ve created your account, you’ll receive an activation code within the email. After that, you’ll need to finish the configuration to set up Your Gateway account. If you’ve previously submitted Self Assessment tax returns before you’ll require to previous UTR to sign up and open the account. It is recommended to ensure you have access to your Gateway account prior to attempting to complete the Self Assessment. This can save time if in any way you are unable to log in. What are the Self Assessment deadlines? You submit tax returns for tax years, not calendar years. And you do this in arrears. For instance for the 2022/23 tax year, which runs from 6 April 2022 through 5 April 2023 will: You must sign up to participate in Self Assessment by 5 October 2023, if you’ve never filed your return prior to that date. complete your tax return by midnight, 31 October 2023 if you are you are filing your tax return on paper File your tax return by midnight on January 31, 2024 if you are you are filing online You must pay the tax due before midnight on January 31, 2024. If you don’t meet any times, these dates are due. You may be liable for a penalty as well as interest on late payments. What information will I need to fill in a Self Assessment tax return? If you’ve never filed an self assessment tax return prior to it might seem a bit intimidating. If you’re familiar with the process, it’s easy, provided that you have all the data that you need. Before you start, be sure you’ve got the following: your ten-digit Unique Taxpayer Reference (UTR) Your National Insurance number Information on your income that is not taxed from the tax year such as self-employment earnings, dividends, and interest on shares the records of any expenses related to self-employment any donations to charities or pensions which could be tax-deductible P60 or any other record that shows how much you earned on which you’ve already paid taxes on. It’s an excellent idea to go through the relevant HMRC help sheets, specifically on the additional sections (called extra pages) which relate to the reason you’re filling in your Self Assessment tax return

Self-Assessment tax return in UK applies to anyone who is self-employed, company directors, recipients of income from renting out a property or other sources not covered by PAYE, as well as those who receive income from abroad. The Self-Assessment tax return must be completed annually, and the deadline for submitting the tax return is usually 31st January following the end of the tax year. The tax year runs from 6th April to 5th April the following year. Many people delay the Self-Assessment tax return in UK form until they are closer to the date of due. There are numerous reasons to complete your tax return sooner could be beneficial to you. Here are some reasons why you should file your Self-Assessment tax return early and ensure your tax affairs are up to date. 1. Better understanding of your liability It is crucial to complete your tax return as soon as you can to keep track of tax obligations. By doing so, you can take advantage of all allowable tax reliefs and avoid last-minute panic, as well as potential interest and penalties from HMRC. It’s important to note that if you owe anything up to £3000 in tax it is possible to collect the tax via your pension or salary and give you time to plan your budget for the payment. But, submitting your tax return earlier does not have to require you to pay your tax later. If you are planning to pay your tax immediately or require to create a payment plan making your tax return earlier can ease anxiety and keep you in the good graces of HMRC. 2. Receive any repayments quicker If you’re in need of an income tax payment, filing your tax return earlier can result in receiving your tax refund quicker and can be beneficial to cash flow during the summer months. 3. Avoid unwelcome surprises next year It is possible that you will have to make payments through your account in accordance with your prior year’s tax obligation. The early calculation of your tax obligation can provide you with more precise information and a better understanding of the tax obligations you will face in the near future (so it won’t be a unexpected surprise the following year). You could also have the possibility of reducing your tax payments on account if you have decreased from the previous year. 4. Make more time to plan your taxes The early filing of your tax return gives you time to look at tax planning strategies and gives you ample time to take action to the next tax year. 5. Use your mortgage or remortgage application If you’re looking to purchase a home or refinance your current property usually, you’ll need to prove your earnings through the submission of the SA302 as well as an HMRC Tax Year Summary. These documents will demonstrate the amount of income you’ve disclosed to HMRC and will provide lenders with the necessary information to process your application. The same applies to other types of finance or benefits, like: Universal Credit Student Finance Vehicle leasing or loans 6. HMRC have just 12 months from the date of submission to start an investigation HMRC typically has 12 months from when they receive your tax return to begin an investigation if they decide to pursue it. If you file your Self-Assessment earlier, the clock begins to tick earlier. Tax investigations could be targeted or random If you want to be safe, protect yourself. 7. Get better protection from unknown elements If you don’t file the tax return until at the very last moment, unidentified circumstances like illnesses, lost information, or even disruptive weather may cause more stress. Being organized and able to handle your tax issues promptly will save you the added stress of not meeting deadlines as well as HMRC penalties and interest. 8. Take advantage of opportunities that are more diverse At Account Ease when we have the chance to talk about Self-Assessment tax return in UK with our clients prior to the start of tax year we can have greater, more meaningful conversations about their financial situation, not only tax. Additionally, we can discuss other opportunities they might have. Engaging in these conversations early will mean you have more time to evaluate any problems and implement any needed solutions in place without running out of time. How the Account Ease team can help The tax department at Account Ease file more than 1,700 self-assessment tax return in UK each year, covering a wide variety of income sources and client circumstances. We’re always willing to discuss different ways our team can assist you in completing your tax return. The Tax Investigation Service also means that for a modest annual fee. We’ll ensure your protection from the need for an HMRC tax inquiry. If you are selected to be the subject of an HMRC investigation. We’ll manage the entire process as well as defend you from HMRC and assisting you in submitting all necessary information while minimizing the impact on your personal and professional life. If you have any issues you’d wish to share with an employee our team of tax professionals, we encourage you to schedule a no-cost consultation. You can make an appointment by filling out our online inquiry form.

If you’re thinking of starting your own sole trader business, it can be daunting to set it up in a way that will deliver the best results to you. However, there are solutions for you that will take a huge amount of workload away from managing finances, paperwork and sole trader bookkeeping associated with running a startup company. This article will show you why it may be a good option to look into hiring sole-trader accountants, and give you information on how they will function as a part of your new and growing business. What Are The Benefits Of Hiring A Sole-Trader Accountant? Easy and Quick Registration You can start working immediately after registering your business at Companies House. This also applies to the setup of your accounting. After you start working, there is only one legal requirement: declare yourself as a self-employed. It’s another simple process that your sole trader accounting firm or sole trader bookkeeper can handle. Saving Time & Money Even if you don’t have to deal with taxes and finances, starting a sole-trader business can be time-consuming. The sole trader accountant can take care of everything, from preparing your tax assessments to preparing and submitting your accounts. This will simplify your tasks and, most importantly, allow you to focus on your business. Accounting services are more expensive for other businesses, which may be more expensive. A good accountant will help you save money by using their knowledge and experience. It is because accountants for other types of businesses, like limited companies, will charge you more. Limited companies require more paperwork than sole traders, which means they will charge you higher prices. Complete Control As a sole-trader, you are the captain of your ship. You are the only one who can make decisions. There is no need for a board or an upper director. The same applies when you hire a sole trader accountant. You can now tell your accountant what you want and how you need them to help. You can save money by letting a sole trader bookkeeper use their experience to assist your business. Some sole-trader accountants are comfortable knowing that they have full control of their business if they ever need it. Moreover, the website of Companies House allows anyone to access information about every Limited Company registered with it, including its annual accounts. Due to their independence, sole traders do not display any information on this website. This allows you to run your business in complete privacy. Fewer Tax Responsibilities You are relieved of many tax obligations as a sole trader. Since your business isn’t incorporated, you don’t have to pay Corporation Tax and submit annual accounts to Companies House. You will instead be required to submit a self assessment tax return each year and quarterly payments once your business is tax registered. Sole-trader accountants can do these tasks at a lower cost than if you were to hire a large firm to handle your annual accounts. They will also be able, throughout the year to give you advice on how to maximize your income while lowering your costs. They might even show you that a limited business is better for your business. Maximise your income by forming a limited liability company. How Can Account Ease Accountants Help Your Sole Trader Business? Our sole-trader accountants are well-versed in helping to manage and optimise the finances of small independent businesses. The extensive accountancy services Account Ease provides are all designed to perfect the financial setup of your business, from helping clients set up their account on Companies House to filing the yearly tax return. Our team will provide clients with quality and game-changing assistance to accomplish a variety of accounting services. If you are looking for a new accountant or have never worked with an accounting firm before, contact our team today to get started.