As a sole trader, at some point you may need to take on staff. As a bookkeeper for your sole trader business, you must record the PAYE and National Insurance details accurately and keep them for three years from the tax year-end they are incurred.

As a sole trader, it is essential to complete an annual Self Assessment Tax Return and submit it to HM Revenue and Customs (HMRC). This process provides HMRC with accurate information about your income and expenses, ensuring you are taxed correctly. If it all seems a bit intimidating, don’t worry: we've got you covered. Say goodbye to accounting headaches and let us simplify the process for you. Here are the essential steps to get your sole trader accounts set up and running smoothly. Step 1: Register as a Sole Trader with HMRC One of the more complicated areas of self-employed accounting is expenses. Allowable expenses must be ‘wholly and exclusively’ necessary for the business (i.e. not something you also use in your personal time) and itemised receipts must be retained for all tax-deductible expenditure. Completing the Self Assessment is easier if you have detailed and clear business records and if you have an online account with HMRC, as this will speed the process up. Make sure you don’t make any of these 10 Common Self-Assessment Tax Return mistakes. There are several ways in which you can complete bookkeeping for the self-employed. The options include online accounting software, Excel spreadsheets and paper-based bookkeeping. Can I Compete my own Bookkeeping?

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You can claim business expenses on your tax return as a self-employed individual. It can help keep your tax bill low, and it’s essential to know what you can claim in tax allowable expenses. If you use your home as an office, you can claim for a proportion of your domestic bills - including lighting, heating, internet and telephone charges, even a percentage of your rent or proportion of your mortgage interest (although this can lead to you having to pay Capital Gains Tax if you sell your property). If you’re a sole trader working from home, it’s worth noting that some of your household expenditure may also be tax deductible. You can find out more about how sole traders could pay less tax in these guides; Running costs of a car or other vehicle, including petrol, car tax, insurance, repairs and servicing.

As well as your income and expenses, it's crucial as a sole trader to understand your tax obligations and set aside the necessary funds each year. This is essential for completing your Self Assessment, which determines the amount of tax you owe. The na_tc cookie is used to recognize the visitor upon re-entry. It allows to record details on user behaviour and facilitate the social sharing function provided by Addthis.com. At Bytestart, we’ve used Freeagent accounting software for over 10 years. As one of our valued visitors, you can get 55% off your first 6 months’ subscription to Freeagent, plus 10% off for life too. Find out more about this offer here. 4. Claim business expenses Learn more about how to fill out a Self Assessment for the first time with our handy one-stop guide. If you discover an error on your paper or online tax return, you can amend it up to 12 months after the 31 January deadline following the end of the tax year.

Once all the figures are posted for the year, you are ready to submit your figures to HMRC for self-assessment. One adjustment that needs completing is deducting the owner drawings as it is not an expense of the business. In the example, the sales are 40175.34 and expenses 36754.74 – 8400 = 28354.74. The total profit for the company is 40175.34 – 28354.74 = 11820.60. Value Added Tax (VAT) is an important consideration for sole traders, and understanding when and why to register for VAT is crucial. Here's what you need to know: If you only have a personal bank account you will have to be more explicit in your records and specify which expenses were personal and which were business-related. This will affect how you record expenses and income, and will take you more time. You need to pay your tax on this income by the following 31 January (you need to submit your tax return by this date too).

Having a separate business account is a legal requirement for limited companies, though not for sole traders. However, it can make your self-employed accounts far easier to manage and help your business to appear more professional. Your accountant (if you have one) will need a full set of your accounts showing your sole trader income and expenditure, from which they can work out your tax liability.

What are self-employed accounts?

LifeSearch Partners Limited (FRN 656479), for the introduction of Pure Protection Contracts, who are authorised and regulated by the FCA to provide advice and arrange Pure Protection Contracts. LifeSearch Partners Ltd is registered in England and Wales to 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386. In general, sole trader self-employed accounts are far easier to manage than limited company accounts. Sole trader bookkeeping requires keeping your financial and business records up to date, as a daily process. Drop us a message if you need help with any of our free accounting spreadsheets or can not find what you are looking for. We may be able to create one for you. Record all your business trips and claim for these - even trip to the local post office in your car to send a business letter or parcel. In fact, you can claim for cycling to the post office. The allowed rate for cycling is 20p per mile - so get on your bike instead of using your car.

So, starting now will give you plenty of time to get used to the process before it becomes mandatory. Do I need an accountant as a sole trader?

What records do you need to keep as a sole trader?

Online accounting systems are becoming more and more popular with small business as they offer extra features such as invoice creation and automatic feeds from your bank account. These features cut out duplication so save valuable time.