Do you need a Sole Trader Accountant?
A sole trader is a self employed individual who is also the sole owner of the business. As a sole trader you must register with HMRC and become responsible for submitting a self assessment tax return each tax year to pay your income tax and national insurance contributions.
Based on the accounting records you keep HMRC requires you to submit your income on your tax return and pay tax on any profits.
The type of sole trader records you will need to keep all depends on the nature of your business with accurate bookkeeping being an important part of your accounting records.
Completing your Sole Trader Tax Return yourself versus an Accountant
The value an accountant can bring to a sole trader varies from business to business and depends on a number of factors including:
- How much time can an accountant save me by managing my accounts for me and submitting my tax return?
- Can I reduce the risk of making costly mistakes and missing deadlines by using an accountant?
- Can I pay less tax by using an accountant?
If you only send out a few invoices and have little in the way of receipts for expenses you might feel that you don’t need any help and should be able to get everything done correctly yourself.
If your sole trader business involves more admin that is time consuming the potential for making errors increases and this is where using a sole trader accountant can support you by making sure your accounts are kept accurately and up to date.
Sole Trader Accountant and HMRC requirements
HMRC can ask for evidence to back up the figures entered on your self assessment tax return.
If you can’t provide HMRC what they need to see you can be subject to penalties and an increased tax bill.
By maintaining HMRC compliant records your accountant can ensure that your tax return can be evidenced in full if required.
Sole Trader Accountant Advice
Running your own business brings with it constant change and the structure of your business as it grows and changes is something your accountant can give recommendations on.
Your sole trader accountant can give you advice on how to structure your business in a different way giving you options like setting up a limited company or a partnership.
The tax advice will be given with your business in mind meaning a bespoke plan can be put in place to keep your business as tax efficient as possible.
Making Tax Digital and being a Sole Trader
Making tax digital is the name HMRC give to the digitisation of their services and how they need individuals and businesses to report to them.
The MTD process is being rolled out in stages and sole traders will have to comply with the making tax digital requirements at some point in the future.
Your sole trader accountant is best placed to get you ready for MTD with compatible software and the new ways in which you will need to report your tax obligations to HMRC.
