Sole Trader Accountant- Do you Need One?


Sole trading has become a go-to business option in the UK lately. According to the statistics, there are 5.6 million private sector businesses, and of this, 3.2 million are sole proprietorships. Sole traders’ numbers are increasing rapidly in the UK.

While these statistics are impressive, the amount of effort that is required to operate in this way is significant.

What is a sole trader?

Firstly, let’s understand what sole trader means.

A sole trader means one person running an entire business by themselves, this can also be considered self- employment. One person will be donning various hats: the business, the boss, accountant, marketing manager, sales executive, and every other hat needed to run the business.

That person will also take all the business profits after paying the tax. It is what makes sole trading unique. However, that one person is also liable for any losses and will bear them alone.

A sole trader is one of the simplest business structures. It has its own set of tax rules set by HMRC and needs an exclusive sole trader accountant to ensure that they follow all    the rules.

Does a sole trader need an accountant?

A sole trader manages every aspect of their business, which is likely to create significant pressure on their time. Also, if that person isn’t good with numbers, they run a high risk of errors in their work, and they can’t afford that. It is one of the reasons why they need a specialist    accountant.

A specialists accountants for sole traders offer tailor-made services to sole trade owners alone,   and this is their area of their expertise. Delegating these tasks to them will provide peace of mind to the sole traders. They are then free to work on the other core tasks of their business without the distraction of having to work  their way through all the numbers.

Here are some more benefits of hiring a sole trader accountant. If you are planning to go for a sole proprietorship, then make sure to read this entire article.

1. Get the basics right

  • With the internet to hand, you can find out everything about starting the business, but what about the taxes and the business jargon that you aren’t aware of or familiar with?
  • The internet has made all types of information accessible easily, but it is often quite conflicting and can confuse a novice in the field. If you want to get the basics of your finances right, you need an experienced accountant. There is a particular procedure to set you up as a sole trader.
  • So as you can see, getting help from a professional accountant is essential. They will handle all the setup of your business according to HMRC rules.

2. Recording the money

Once you have established the basics right, it is time to start the business. Cash flow is essential    for managing and scaling a successful business.

You must record cash inflow and outflow accurately. There are two common methods available for recording transactions, accrual and cash accounting.

Under the cash method, you record transactions when cash is paid or received, whereas under the accrual method, you record transactions when they occur.

You can use one method for standard accounting and the other method for VAT only. It may sound complex, but it can have cash flow benefits if you offer a more extended credit period to customers.

One mistake in your tax filing can result in huge penalties. This is not something that a new businesses can afford.

On top of it, you should ensure that you file taxes before the deadline set by the government, or else you  will be penalised.

Although you may try and keep up with all the transactions, filing taxes won’t be easy. It is important to understand that tax is a complicated subject, and that the UK has one of the most complicated tax frameworks in the world. Accountants spend years understanding these tax concepts and do overtime to keep up with the HMRC rules.

They are professionals with a clear idea of what to do and what not to do. Investing in a sole trader accounting service is the best and, of course, the easiest way to get your taxes done.

3. No need to research terms

Understanding some terms and financial documentation is challenging and time-consuming if you are not from a financial background. You will have to do ample research.

An accountant is already familiar with all of these terms and documentation. They can fill out the paperwork quickly and even make you understand these terms without a lot of research.

4. Save money with tax deductions

Opting for a self-employed accounting service may seem like an investment, but do you know you can get a tax deduction for it. Yes, HMRC has provided tax deductions on certain expenses, and one such expense is an accountants cost.

You can outsource, hire someone or get a freelancer to complete the work. The amount you pay is tax-deductible. HMRC provides tax deductions on various expenses for small businesses, and an accountant will have a clear idea about it. Your benefits will exceed the cost of  investing in an accountant.

Tasks sole trader accountant will do for you
  1. Self-assessment tax return
  2. National Insurance contributions
  3. VAT
  4. Bookkeeping
How to choose the right accountant?

Choosing the right accountant is essential for your business. Remember that anyone can call themselves an accountant as it is not a legally protected name. Always opt for a Chartered Accountant or certified accountant so you get valid credentials for your sole business accounts.

Price is important but never go for something purely based on price; the price-quality equation is essential. Do ample research; and with everything available online, you can check for references, testimonials before proceeding to the next stage. Remember that you need someone who has experience as a sole trader accountant to understand your business in a better way.

Wrapping-up

Establishing and maintaining a business all alone is not an easy task. There are various tasks where you need help from professionals, and finance is one of them.

Once you hire Sherwin Currid, you can get rid of various tasks from your in tray. As mentioned above they can help you with all the matters related to your numbers and beyond. You can also go for the best accounting software for a sole trader, such as Xero. This software can help you with bookkeeping, creating balance sheets, etc

 

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