A sole trader accountant is a specialist accountant whose responsibility is the maintenance of up-to-date financial records for sole trader business owners and on-time filing of tax return forms to HMRC standards.

One of the major benefits of using an experienced sole trader accountant is that they will use as many of a sole trader’s expenses, allowances, and reliefs to reduce the sole trader’s tax liability as much as legally possible.

They also act as the middleman between a sole trader and HMRC meaning that the accountant not only files returns on the sole trader’s behalf but they will field most types of enquiries by HMRC directly rather than HMRC approaching the sole trader for more information.

Black and White Accounting represents hundreds of sole traders primarily across Surrey and Hampshire, but from wider afield as well. For a competitive fixed monthly fee, we take responsibility from you for financial recordkeeping, the calculation of taxes due, and the submission of necessary documents to HMRC. This is part of their key services of Accounts & Tax, Book Keeping & Payroll, Business Planning and Software Training.

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    We also provide business advice and support to sole traders on best business practice, how to grow their businesses through successful forward planning and checking sole trade is still the best business structure for you.

    Self-employed tax return

    Sole traders are self-employed and they pay income tax and two different types of National Insurance contributions. Sole traders report how much they earn once a year to HMRC using a self assessment form.

    You must get your self assessment tax return in by the 30th October following the end of the financial year (5th April) if you use the paper form. If you file electronically, the deadline is the 31st January following the end of the tax year.

    Self-employed tax

    You pay income tax on your profits. Profit is defined as the money you have remaining once all of your allowable expenses have been subtracted from your turnover, regardless of how much you’ve actually paid yourself.

    Please note that not all expenses are allowable and that some expenses may not be fully allowable, especially if you use some business assets in a personal capacity too (like a laptop computer, for example).

    You must also pay Class 2 National Insurance contributions (a fixed rate per week) and Class 4 National Insurance contributions (a percentage of profits above a certain threshold).

    Payment of taxes due must be made by 31st January and you will have to make payments on account where your tax liability exceeds £1,000.

    Sole trader accountant FAQs

    Sole trader definition

    A sole trader is the only/sole owner of their own business but who has not incorporated their business as a limited liability company. A sole trader pays taxes on their profit and they are personally responsible for losses.

    How to Register as a sole trader

    You must register with HMRC within three months of being self-employed/becoming a sole trader. You need to have earned more than £1,000 from self-employment in the previous tax year. You may also need to start paying Class 2 National Insurance contributions straight away and you may also need to prove that you are self-employed in order to make a successful claim for Tax-Free Childcare.

    When you register as a sole trader, you also register for self assessment. Click here to register online, or we can do this on your behalf if you would prefer. Once you are registered with HMRC you will have a ten-digit Unique Tax Reference (UTR) which is used to uniquely identify you to HMRC and make payments to them. Once we have this number, we can register to be your agent with HMRC, which means we can liaise directly with them on your behalf to ensure everything is dealt with quickly and competently.

    Sole traders and other taxes

    Sole traders must currently register for VAT if their turnover exceeds £85,000 or it is likely to exceed £85,000. There are different VAT schemes available for sole traders depending on turnover some of which may provide you with a financial advantage. Please contact us to discuss this further.

    Marriage Allowance

    Could you benefit from Marriage Allowance? Marriage Allowance currently lets you transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, thus reducing your tax by up to £250 per year.

    You can benefit from this if:

    • You’re married or in a civil partnership;
    • Either you or your partner earn below the Personal Allowance (currently £12,500);
    • The higher earning partner earns between £12,501 and £50,000, before they receive Marriage Allowance.

    Marriage Allowance cannot currently be claimed where you’re living together, but neither married nor in a civil partnership. For information about this or other allowances and reliefs you could benefit from, speak to us today by emailing us on [email protected] or call us on 0800 140 4644.

    Sole Trade accounting software

    Do you need to have a better handle on your numbers? Do you have customers that owe you money and you struggle to track this? Why not use an Accounting software to not only make the day-to-day running of your business easier, make better decisions based on better information, but also save your time and get your money in sooner.

    Not only are we Gold partners of Xero, we are also certified partners of QuickBooks and Sage and work with FreeAgent and Wave, to name but a few. We work exactly how you want to work, so whatever software solution you want, we can deliver through set up, training, implementation through to continued support. Please contact us if you would like to know more about this service.

    Should I incorporate?

    Directors of limited companies pay themselves in a different way – usually through a mixture of salaries and dividends. In general, directors pay less tax than sole traders however there are additional administrative requirements in setting up and running a limited company.

    Generally, if you earn more than £30,000 a year as a sole trader, there may be a financial advantage into setting up a limited company. However, the calculations are different for every sole trader so we would encourage you to contact us to run a few worked examples on your income so we can show you how much tax you would pay as you are now and as you would be if you incorporated.

    What are the key advantages of a sole trader?

    The key pros of a sole trade include:

    • Low cost, easy to set-up;
    • Full control retained; you can minimise costs in order to maximise your profits;
    • Minimal financial reporting and information in the public domain; and
    • It’s easy to change your minds and close the business if it doesn’t work for you.

    What are the key disadvantages of a sole trader?

    The key cons of a sole trade include:

    • Full liability for debt i.e., no limitation of liability;
    • Often pay more in tax, once you get to a certain size;
    • Decision making sits only on the shoulders of the sole trader, which can be good or bad depending on the individual; and
    • Lacks credibility in market meaning often less access to finance

    Business accountants in Hampshire and Surrey

    Let us get to know you and what you want from your business. We’re offering an hour’s free consultation to prospective sole trader clients across Hampshire, Surrey and surrounding areas. We offer a wide range of Accounts & Tax, Book Keeping & Payroll, Business Planning and Software Training to sole traders in Surrey, Hampshire and surrounding areas.

    Once we understand more about you, we’ll then send you a bespoke quote to meet your needs to deliver the greatest value at a competitive monthly fixed fee.

    Please get in touch with us using the form below, call us free on 0800 140 4644 or email [email protected].


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