Accountants For Sole Traders | Accounting Packages For Sole Traders
Setting up as a sole trader is a popular choice for individuals who are self-employed or aspiring to be. According to the UK Government, a significant majority, 76%, of small businesses in Britain operate as sole traders. Being a sole trader means working for oneself, without the need for partners or shareholders.
This legal form offers simplicity and flexibility, as it requires minimal formalities and allows specialist sole trader accountants full control over decision-making. Sole traders are personally liable for their business’s debts and obligations, but also enjoy the benefits of keeping all the profits. It is essential to consider the financial and legal aspects before embarking on this entrepreneurial path.
When registering as a sole trader, individuals accept the personal financial risk associated with their business. Since the sole trader business is not considered a separate legal entity, the sole trader is personally liable for any debts or legal actions against their work. In contrast, owners of limited companies enjoy limited liability, which means their personal assets are generally protected.
Keeping detailed records of income and expenses is crucial for sole traders. Utilizing basic bookkeeping software can simplify the process of logging invoices, receipts, and expenses. This will streamline the submission of self-assessment tax returns to HMRC, as it is mandatory for all sole traders.
Starting as a sole trader can be overwhelming, especially when it comes to setting up and defining your business proposition. At Target Accounting, we understand the challenges and can assist you in finalizing a detailed business plan. This plan serves as a roadmap for your start-up, providing clarity and certainty. Additionally, it can be particularly useful for sole traders seeking business finance, whether from traditional banks or alternative finance lenders.
How do I register as a sole trader?
To register for Self-Assessment, you must inform HMRC that you will be submitting a tax return annual self assessment amount. This can be done online or by printing and mailing the required form from HMRC’s website. This registration process is essential to ensure accurate tax reporting and compliance with HMRC regulations.
When informing HMRC about your intention to work as a a sole trader accountant, they will provide you with a Unique Taxpayer Reference (UTR). Additionally, they will create an online account specifically for your Self-Assessment obligations. This online account serves as a platform for managing and fulfilling your tax-related responsibilities efficiently.
Once you have registered for an online account with HMRC, you will receive a letter containing an activation code. This code is necessary to access your online account. With your online account, you can obtain details about your tax status, such as the amount of tax you have to pay income tax you paid in past years, your tax code, and the deadline for filing your taxes.