Audit and Accounting
I’m a sole trader – do I need an accountant?
Being a sole trader involves running your own business as an individual on a self-employed basis.
Having sole trader status will allow you to retain all your business’s profits each year once you have paid the taxes due on them. The flip side to this is that you are also personally responsible for any losses and liabilities that you incur.
What are my duties and responsibilities?
As a sole trader, it is just you in the business, so you have the responsibility of managing every aspect, whilst also keeping business records. This will range from pitching to prospective clients, carrying out the work, managing client relations; all the way through to billing and record-keeping – and this is all before having to deal with your tax returns!
It is possible for a sole trader to take this all on themselves without any help, but to achieve a greater level of efficiency, many sole traders outsource functions within their business.
Why turn to an accountant for help?
Many people choose experts to help them with tasks that they are either not as comfortable with or are time-consuming. Bookkeeping and tax returns are usually high on most sole traders’ lists.
The main benefits of using an accountant are:
- Being able to spend more time on other parts of your business
- Less chance of mistakes in filing tax returns
- Using the expertise to ensure you are minimising your tax liability
- Peace of mind!
Services that accountants can provide
Bookkeeping and maintaining records
Throughout the year, all businesses undertake activity that usually involves paying expenses and generating income. It is essential to maintain proper books and records so that ultimately, the necessary filings for taxes can be made.
Whilst some sole traders are happy to carry this out once a year in line with their tax return, as a business scales, so might the need to keep a finger on the pulse when it comes to updating financial information.
Accountants can provide bookkeeping services that assist with the admin burden of running a business so that there is not a mad scramble at the year end to gather the required information.
Once a business forecasts that it will generate revenues of at least £85,000 in the following 12 months, it may be that the business needs to register for VAT and submit quarterly VAT returns to HMRC.
Accountants can help navigate the rules for you and take away the stress of registering for VAT and preparing the subsequent quarterly returns whilst providing advice on the timing and technical tax knowledge of what is and is not appropriate for VAT.
The main duty of a sole trader to remain compliant with tax laws, is the need to file a tax return annually with HMRC to report profits and make the appropriate tax and national insurance contributions on these profits.
These forms can be complex and time-consuming without the necessary expertise. An accountant will be able to take this burden away to allow a business owner to concentrate on what they do best – run their business!
As well as the obvious time saving that can be achieved through using an accountant to file tax returns, an accountant can also ensure tax savings are made, which might otherwise have been missed.
Accountants can also help in other ways and are often used as a business advisor rather than just somebody to fill in your tax returns.
Other areas that an accountant can help with
As well as preparing your annual tax return, an accountant can support you across a variety of services that go beyond compliance including:
- Strategic advice and guidance to see where your business is headed
- Ensuring that the structure of a sole trader business is right for you
- Tax planning advice related to both the business and your personal circumstances
Choosing the right accountant
Should you decide that retaining the services of an accountant is the right thing for your business, you will want to choose the accountant that best fits you and your business. Whilst price is, of course, a significant factor in this, it should not be the only consideration.
Having a responsive, trustworthy and quality accountant is the vital building blocks to building a lasting relationship that ensures your business is always running efficiently, is future-proofed and making the most of the opportunities presented.
If you are a sole trader and looking to find an accountant, speak to our team today for an initial consultation.