Sole Trader Tax return accounting Services
Our vision and our achievements:
- Over one hundred ‘5 star’ “client satisfaction reviews” Save time, stay organised and Transform into a profitable business
- Business excellence award winners for 2023 for “Most Client-Focused Business Tax & Accounting firm” knowing you’re in safe hands
- 10 years of experience with HMRC and our client service guarantee, maximising your tax allowances
We go one step further for our clients.
As a sole trader, you may benefit from a variety of accounting solutions provided by GM. Although operating as a sole trader is one of the most straightforward methods of getting started a business, several procedures must be followed.
Is it your intention to establish a business as a sole trader, or are you currently in the process of launching one? In this case, GM Accountants can assist since we offer a ‘one-stop-shop for accounting and tax services for independent companies and self-employed professionals.
Establishing yourself as a Sole Trader
If you are self-employed or want to become self-employed soon, you should consider starting as a sole trader. According to the United Kingdom government, sole trader accounts for 76 percent of all small companies. A sole trader is a business owner that operates only for themselves.
To become a sole trader, you must agree to assume financial risk on your account. Given that your business is not a distinct legal entity, you would be personally responsible for any debts or legal actions brought against your business. This is in contrast to a limited liability corporation, in which business owners are only liable for up to a certain amount.
For many business owners, deciding whether to form a limited business or not is a critical choice. There are many significant changes, including tax benefits, when switching your business from a sole trader to a limited-liability corporation.
You should carefully examine the tax consequences of being a sole trader before making the decision to go into business for yourself. In addition, depending on your yearly revenue, you may be required to register for VAT.
When you operate as a sole trader, you should maintain comprehensive records of all of your revenue and expenditures, just as you would with any other kind of business.
It is possible to record invoices, receipts, and spending using essential accounting software that is simple to use. The process of submitting your self-assessment tax return to HM Revenue and Customs (HMRC), which is a legal obligation for all sole businesses, is made more straightforward due to this arrangement.
In the event that you are still in the process of working out how to start up as a sole trader and are taking your time to establish your business proposal, we may assist you in finalizing a comprehensive business plan. A business plan may serve as a road map for your new venture and can offer clarity and assurance for sole traders seeking business financing from banks or alternative finance providers.
Registration of a Business Name
Functioning as a sole trader is less formal than operating as a limited business when registering a business name. You have the option of trading as a self-employed individual rather than under a business name. Even if you choose not to incorporate, you still have the opportunity to register a lone trader business name.
Remember, if you are operating as a sole trader, you are not permitted to use the following words to describe your business:
- Public limited company (Plc)
- Limited (Ltd)
- Limited liability partnership (LLP)
These terms would give the impression that your self-employment is functioning under a different business status than it really is. A sole trader’s business name should be chosen with care, and it must not include any trademarked terms or phrases, among other things.
Sole Traders tax
HMRC collects income tax and National Insurance payments (NICs) from self-employed people via a system known as self-assessment. You must register with HMRC for self-assessment, which GM can assist you with.
The following are the critical dates for filing tax returns and making payments as a sole trader:
The deadline for filing the previous year’s tax return. Tax balances owing of the prior year and the first payment for the current tax year are due on this day.
Payment of the second instalment on account of the current tax year is due on this day.
It’s critical to evaluate the effect that these account payments may have on cash flow. After your first year as a sole trader, you may be obliged to pay 150 percent of your tax for the first year by the next January 31st and another 50 percent by the following July 31st.
It is critical to maintaining precise records of your sales and expenditures to guarantee you give an accurate account of your yearly profits. Our accounting services can take care of the details, allowing you to concentrate on expanding your business. By retaining the services of a professional GM Accountant, you can be certain that you will pay the correct amount of tax on time and avoid HMRC penalties for late filing.
If you work as a self-employed subcontractor in the construction sector, you must follow particular tax rules that regulate how contractors handle payments. As a sole trader subcontractor, you may be required to deduct 20% of your bills and pay them directly to HMRC unless your contractors register for gross payment status. You shall, however, be responsible for the maintenance and organization of accurate self-assessment tax returns on a yearly basis.
Registration for the VAT
If your sole trader revenue is expected to exceed £85,000 per year, you must additionally register for VAT with HMRC. As a VAT-registered sole trader, you must charge consumers VAT on all qualifying sales and remit it directly to HMRC when filing your VAT reports.
Being VAT registered offers a number of advantages, including the ability to recover VAT on qualifying goods and services purchased for your business.
When establishing a sole trader business, you may also need to consider exclusive trader insurance, as well as specialized licenses or permits to operate legally. For instance, taxi drivers who work independently must get either a Hackney Carriage or a Private Hire Vehicle (PHV) license.
Likewise, if you want to experiment with selling products on the street as a street trader, you must acquire a license from your local government. If you’re new to the catering business, you’ll need to have your facilities inspected and authorized before you can serve meals to the public at large.
Can GM assist me in establishing myself as a sole trader?
GM Accountants can take care of your sole trader registration swiftly and effectively, allowing you to focus on establishing and operating your business. We will need just the bare minimum of information from you in order to complete the registration procedure for our agent account.
Is it possible to be a sole trader and work at the same time?
If you want to operate a self-employed business as a secondary source of income to complement a full-time or part-time wage, you must ensure that this is permitted under your employment contract. Additionally, self-employed individuals must report and pay their own taxes and National Insurance on their earnings through self-assessment tax forms. You must disclose your employment income and any other income for the relevant tax year on your yearly self-assessment using P60/P11d forms.
Additional ways that GM may assist you as a sole trader
Numerous services that we provide are suitable for expanding sole merchants. We provide very affordable options for digital scanning expenses through the platform. This program enables you to electronically record and transmit receipts to your accountant, allowing you to stay on top of your books.
Additionally, we can produce monthly management accounts and year-end financial statements at reasonable prices to help you formalize your yearly self-employed revenue. This enables you to get a better understanding of your business’s performance. At the same time, official year-end accounts may also be required for sole traders seeking a mortgage or raising financing from high-street banks and lenders.
GM professional accountants have offices in Ilford, Canary wharf London , Wimbledon and Birmingham.