sole trader accountants

Sole Trader Accountants

Are you looking to start a new business but are unsure where to begin? Becoming a sole trader is easy to set up, providing you keep on top of your taxes, file your self-assessment forms and plan for your financial future. At CloudCo Accountancy Group in Milton Keynes, we appreciate that when you work for yourself every penny counts, but when you invest in us, you’ll soon discover that our expertise are an expense that’s more than worth the cost. 

Accountants for sole trading businesses provide basic accounting either in-person or through online accounting to self-employed individuals who need financial assistance. The main purview of sole trading accounting is to help businesses avoid debt whilst maximising profits.

At CloudCo Accountancy Group in Milton Keynes, we can help with all of your sole trading accountancy needs and have thorough and long standing expertise in this area. Read on to find out more about sole trading and how professional accountancy can boost your business profits.

Sole Trader Overview

Many people frequently become confused about the differences between self-employed individuals and sole traders, so we will break this down for you. A sole trader is a legal business structure where the person is self-employed and responsible for running the business solely.

It’s the easiest business structure and hence the most popular one.

Here, the liability is unlimited. You are completely responsible for your business and finances. It is treated as one entity.

With that in mind, a sole trader has to pay tax on the profit earned and is above their personal tax allowance,(£12,500 for the year 2019-20), and the deadline for online tax returns is 31st January after the end of the tax year.

Hence, with being a sole trader, you don’t have any obligation whatsoever with the filing of the accounts. Little paperwork is required and sole trader setup is easy.

Sole traders have to keep a record of expenses and income to file tax returns, but this is a nice trade-off since there is greater privacy compared to limited companies as their data can be found in Companies House.

Sole traders will need to pay Class 2 NI (National Insurance) contributions of £3 pounds per week and Class 4 contributions on profits in excess of £8,632.

The Process of Setting Up as a Sole Trader

First and foremost, and quite important to many, is that the process of setting up this way is very easy.

Setting up a sole trader business is as simple as beginning your business activity and making sure that you fill out a self-assessment return with HMRC at the turn of the year.

There are very few legal requirements to keep track of, and you have full and total independence from the rigors of the workforce, you only need to ensure you make good on your required income tax payments.

Business profits for sole traders are generally taken out of the business by the owner and this is referred to commonly as ‘drawings,’ so the owner takes these drawings and this is the income the owner profits from their business.

If the owner doesn’t take the money, it is simply reinvested into the business. All of the profits of the business, whether drawn out or not, is liable for income tax.

What Are the Disadvantages of Being a Sole Trader?

Throughout our years of providing accounting services, we have typically found that some of the main disadvantages for sole traders are what typically leads many to consider becoming a limited company.

Being a Sole Trader business comes with the full liability of the business being attached directly to you. This means that if the business you operate owes money, and you cannot pay the funds, your assets can be seized to satisfy these debts-there is no legal protection.

Another disadvantage for sole traders is that capital investment is also limited. You cannot have investors buy stock in the business and this is because there is just one single owner.

A positive or negative aspect of sole trader businesses (depending on how one looks at it), is that by law, all you need to have is a profit and loss statement. Quite often, a sole trader will have a profit and loss statement and a balance sheet, but generally, only the profit and loss statement is needed.

But not having a balance sheet can cause disruptions in keeping track of the business’s finances, which is where an accountant, whether in-person or through online accounting, can become such a benefit.

Sole Traders vs. Self-Employed: What’s the Difference?

There is no difference between the terminology of sole traders and those who are self-employed. Both descriptions refer to the same business overview.

So if you hear some refer to a business owner as self-employed, this means the exact same thing as calling the said person a sole trader.

It’s just a semantics preference.

How Can Sole Trader Accountancy Services Benefit Me?

Utilising our accounting services is a great benefit to consider for sole traders since this allows business owners to focus on other parts of the business where they have their strongest points, such as product development, acquisitions, and marketing.

Using one of our qualified accountants and having access to our accounting software is a good business move for new businesses.

If you are new to the world of commerce, and you want to have a fighting chance of making your operation a success, by tapping into our insight and utilising our advice is often essential.

At CloudCo Accountancy Group we can provide tax services, financial advice, and even financial management. Our accounting professionals help maximise profitability, and can even assist you in registering for VAT and providing accounting details either in-person or through online accounting.

How Do I Handle Tax as a Sole Trader?

When you are working as a sole trader, or self-employed, you need to fill in a self-assessment tax return. We at, CloudCo Accountancy Group, offer a comprehensive self-assessment tax return service that ensures that there will be no mistakes in your tax return.

Besides undertaking the obligatory computations and completing your return, we will advise on how you can minimise your tax liability. In case of any tax issue that arises with HMRC, we will directly deal with HMRC on your behalf.

Our Sole Trader Accounting Services Include:

We will do all the paperwork for your annual tax returns. When you hire us, you can rest assured to have no deadline, no costly mistakes, and no missed opportunities. We can oversee how much tax expenses are costing your business and how we can best resolve these matters to ensure your business operations are the most profitable.

Should I Stay a Sole Trader or Go Limited?

Conducting business as a sole trader has many benefits in terms of requirements and regulations, but you do miss out on some key advantages that come with being a limited company.

With a limited company, you have limited liability, and it is a separate business entity in the eyes of law.

This is the most tax-efficient way of operating the business as you are only liable to pay corporation tax which is 17% and dividend tax.

Tax is deducted from the directors’ salaries via PAYE and paid at regular intervals to HMRC.

The disadvantage here is that you have to prepare annual accounts and then file with Companies House, and you also need to file corporation taxes with HMRC. This can be costly and time-consuming as you’ll need to deal with extra paperwork.

Additionally, information on your business can be found on Companies House.

By separating your business entity, has more credibility with banks and other businesses often trust you more. Plus, both employer’s and employee’s National Insurance (NI) is payable on directors’ salaries and bonuses.

Therefore, the advantages of becoming a limited company are great, yet it must be understood that this does require much more oversight and transparency for your business as opposed to simply remaining compliment with taxes as a sole trader.

Sole Trader Accounting FAQs

You can handle this type of business on your own, providing you have accounting software, and ensure your accounts are reconciled through taxes at the beginning of the year.

Keeping track of your finances can be a timely process and most sole traders prefer collaborating and consulting with accountants so that they have more time on their hands to excel at what they do best - running their business.

Yes, you will need to file this return at the beginning of each year.

An accountant can use accounting software to keep track of your expenses, and study your accounts through bookkeeping software to make future predictions and suggestions for your business and produce taxation reports, to make the process so much easier.

You technically do not need a balance sheet, although keeping a balance sheet within some sort of bookkeeping software, or through an accountant, can be beneficial for your company, and your company accounts in the long run.

At CloudCo we use a number of different bookkeeping programmes and have even developed our own in-house specialist online accounting software, which we recommend our clients to use in order to help manage their accounts in a seamless and modern way.

Typically, a sole trader only needs to ensure their taxes are reported properly at the beginning of the year. No additional account is needed, unless you decide you want to become a limited company, in which consulting a dedicated accountancy professional or accounting team can be beneficial.

At CloudCo we use a number of different bookkeeping programmes and have even developed our own in-house specialist online accounting software, which we recommend our clients to use in order to help manage their accounts in a seamless and modern way.

Why Choose CloudCo Accountancy Group?

At CloudCo, our dedicated sole trader accountancy services are tailored to deliver affordable and faultlessly efficient, comprehensive online services, which our customers can rely upon completely.

When you contact us, we will start looking after your sole trader accounts to ensure 100% compliance, while proactively helping your business make the most of the benefits, credits, allowances, rebates, incentives, and transfers of assets HMRC allows, in order to pay less tax compliantly.

In short, we can assure you that our dedicated accountants can do a whole lot of instrumental things for your company and play a vital role in its success.

Request a callback or contact CloudCo Accountancy Group today for a free consultation to find out more about the advice and guidance on accountancy and compliance that we offer.

Once you get in touch with us, we will becomes the newest member of your team, there to provide accounting software systems and advice when you need it the most.

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