A Sole Trader is an individual that owns and runs a business.
Becoming a Sole Trader is the simplest way to get your new venture off the ground – but watch out! You and your business are one and the same, so if anything goes wrong you’ll be personally liable for any debts. As a Sole Trader, your business income is counted alongside any other personal income you have for tax purposes, so accounting is relatively straightforward. We’ll help you fill out and submit your paperwork, and let you know what kind of National Insurance you have to pay on your business profits. Many Sole Traders later progress to operating through a limited company when they start to make reasonable profits.
Generally, you should register with HMRC the moment you start out so as to not get stung with a nasty penalty. You don’t need to register with Companies House, but it might protect your brand if you do. If you’re unsure whether you need to register for what you are doing, give us a call.
Paying Your Dues:
Tax and National Insurance
After registering as self-employed, you should automatically be sent a Self Assessment notice at the end of each tax year (6th April to 5th April).
The deadline for submitting a paper return is generally 31st October, or 31st January if you do it online. If you owe any tax, you may also have to make ‘payments on account’ on 31st January and 31st July.
Value-Added Tax (VAT)
You’ll have to register for VAT if your annual turnover reaches the current threshold, or if you expect it to do so in the coming twelve months. The threshold right now is £81,000 (from 1st April 2014), and the standard VAT rate is 20%.
When you register for VAT, you’ll need to charge VAT to all your customers, but you’ll be able to claim back the VAT you have paid on work-related costs. You might be better off registering for VAT even if your annual turnover is below the threshold. You may also be better off using the flat rate VAT scheme, where you pay a fixed percentage of your annual turnover rather than calculating the input and output VAT on each transaction.
Qorro Accountants can advise on the best VAT registration set-up for you.
Our Sole Trader Accounts and Tax Service
At Qorro & Associates we can take care of all the accounting and taxation requirements of Sole Traders for a competitive low cost monthly fee. We can offer many Sole Trader accounting services including help with registering the business and offer ongoing support and assistance going forward. We also regularly review your business to see whether it is operating in the most tax efficient way and offer unlimited help and advice throughout the year, included within the monthly payment.
Want to find out more?
If you would like to find out more about the truly comprehensive service we offer to Sole Traders, whether you are an already established business or just about to venture out on your own, then please use the links below to get in touch with us or get started immediately with an instant quotation.