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Accountant In Dunfermline: OnTax | Sole Trader Tax Return

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Typical Sole Trader Accounting Fees

Startup
Sole Trader
Not Vat Reg'd

From £20 PM
  • Meetings & Support
  • Book-Keeping - Not Inc
  • Personal Tax Return
  • Optional Extras
  • Payroll @ £30 Per Run
  • Vat Returns £POA

Established
Sole Trader
Not Vat Reg'd

From £40 PM
  • Meetings & Support
  • Book-Keeping - Low Volume
  • Personal Tax Return
  • Optional Extras
  • Payroll @ £30 Per Run
  • Vat Returns £POA

Established
Sole Trader
Vat Reg'd

From £70 PM
  • Meetings & Support
  • Book-Keeping - Low Volume
  • Vat Returns
  • Personal Tax Return
  • Optional Extras
  • Payroll @ £30 Per Run

Testimonials

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OnTax Accountant In Dunfermline Sole Trader Tax Return

Get Help Completing Your Sole Trader Tax Return At A Price That is Right For You

Here’s How We Can Help…

Deciding To Become A Sole Trader

Are fed up working for someone else? Maybe you think you can do a better job than what they are doing or perhaps you are just fed up of living the typical 9 to 5 life. If so, becoming a sole trader just might be the solution you are looking for.

The Dream Of Being Your Own Boss

If you want to be in control of what you do and how you operate your business then becoming a sole trader helps you do this. You will be in charge of making all the business decisions and you don’t have to answer to anyone else! This will allow you to run the business the way you pictured it without any interference from anyone else. If you are looking for flexibility then becoming a sole trader can address this as you choose what hours you work.

How Do You Register As A Sole Trader?

You have now decided you want to become a sole trader but you are unsure exactly how you do this. Well, all that you need to do to become a sole trader is provide us with some basic personal information and we will register you with HMRC. This will save you valuable time, meaning you can get on with what’s important to you.

You should then receive a personal UTR number in the post from HMRC. This is your personal tax reference. You need to pass this number on to us as we will need this when it comes to submitting your personal tax return. When you are registered as ‘self-employed’ you will then be required to produce a personal tax return each year and submit it to HMRC, this will allow HMRC to ensure that you will pay the appropriate level of income tax and national insurance based on your income and profits from your business.

Some useful advice for you if you plan on becoming a sole trader are, you should keep records of all the sales you make and your expenditure. You will require this information when it comes to preparing your personal tax return. It will also ensure the figures on the tax return are as accurate as possible if you retain all the relevant paperwork.

What Commitments Does A Sole Trader Have?

If you don’t like commitment then fear not as there is little you are required to do when you are a sole trader. One thing you will be required to do is to submit a tax return once a year. This will consist of your earnings and expenses so all you need to do is hand us the relevant information and we will take care of the rest.

You should retain all of your paperwork but it is not likely that there will be a great deal of paperwork involved.

How Much Tax Will I Pay?

How much tax you will pay is likely to be a major topic when it comes to you deciding if you would like to be a sole trader, after all the less money you have to pay to the tax man the better! How much tax you pay will be worked out on how much profit you make for the year. Depending on what your net profit is you might have a large tax bill. The reason sole traders can end up paying a lot of tax is due to the fact that you will pay income tax on all of your profit made. In some cases, this can be as high as 45%. Unlike if you have a Ltd company you will not have the ability to leave money sitting in the business to save tax due to the fact that you are required to report all of your earnings in the year it is earned.

As a sole trader you will pay tax on all income made in that year. You will pay income tax on taxable profits of the business as well as class 2 and class 4 national insurance on the taxable profits. On top of this, the taxman will ask for “payments on account” which is essentially advance payment of next years tax bill! There are ways to avoid this, further information can be given on request.

What Are The Advantages Of Being A Sole Trader?

You will be glad to know that there is not much extra work you need to do when you are a sole trader apart from keep record of your sales and expenses. If you are looking for an option which is low maintenance then being a sole trader is the way to go.

Something which might also interest you is that you will be able to claim tax relief on all business expenses and business purchases.

There is also no need to for you to register with companies’ house like you would have to do if you were a company, therefore you are saving on the registration fee and the hassle involved in registering. This also results in there being little paperwork involved and therefore little bookkeeping needs to be done. Since there is not as much work involved in preparing a sole traders books it is likely that you will get accounting fees cheaper than what you would had you been a limited company instead.

You are not required to submit a set of accounts when you are a sole trader, this is a big advantage as it means that there is not as much work for you to do and therefore you will be saving time and money without having to prepare accounts. Although you should still keep good records of your paperwork as these will still be required when it comes to submitting your tax return at the end of the tax year.

Unlike when you are a limited company there is no requirement for your personal information to be on public record, so you have more personal confidentiality.

When you trade as a sole trader there are not as many restrictions on you as the sector is less regulated. This means that you have the ability to run your business exactly the way you would like to as there are not rules you must comply with. You don’t have to make business decisions based on fitting in with rules and regulations, so that is one less thing to worry about!

You will also have full control of your business when you are a sole trader this means all the decisions can be made by yourself without other people having their say. Ultimately, you can do things that suit you and you don’t need to compromise to please anyone else.

So Are There Any Dis-Advantages To Being A Sole Trader?

When you are a sole there is a certain level of risk involved as you have unlimited liability. You can he held liable for and debts which may occur and therefore your personal possessions can be taken in order to clear your debt, this includes your house and your car. This is because when you operate as a sole trader you personally are the business, there is nothing separating you as a separate legal entity.

Being a sole trader might not give as professional an image as it does when you have a company. This can put some people off from choosing you to do work for them. Some larger firms are known to only deal with limited companies and won’t even consider dealing with a sole trader.

It can also be harder for you to obtain business finance such as loans when you are a sole trader, it can be seen as riskier to lend to a sole trader than to a business. This might be an inconvenience when you are looking for some extra money to help you start running your business.

Further, you will pay tax on all business profits as opposed to when you trade as a one man limited company and only pay tax on the money you take from the company.

Another thing to think about is lets say you are a joiner. You understand everything there is to being a joiner. But when you become self employed as a sole trader suddenly you are faced with a barage of new things to deal with; websites, marketing, finance, cashflow, liasing with an accountant, insurances..so on and so forth. This may not be what you envisaged at first but it is the reality of being a sole trader.

The Pro's & Cons Of Being A Sole Trader

If you feel you are stuck in a rut and you feel that you are ready to change your life for the better and the thought of working for yourself, where no one else can dictate to you what jobs you are to do and how you are to do them, sounds like a dream then becoming a sole trader could very well be the leap you need to take. You will be in control of your work/life balance and you can create a work life that fits in with your social life.

From the points made above you can see that trading as a sole trader doesn’t have to mean lots of extra work has to be done as there is not much extra work for you to do apart from keeping all of your paperwork. Working for yourself with little extra work required definitely sounds like a dream come true.

The initial process of registering as a sole trader is extremely simple and if you let us know you would like to become a sole trader we can start the process for you, we can help you make your dream become a reality in no time.

Frequently Asked Questions

What Are The Benefits Of Going Self Employed?
  • You are your own boss - something which can be very satisfying.
  • You will naturally work in different roles and for many different companies - this will help you to build a unique range of skills and experience.
  • You have the freedom to work when and where you choose, and for however long you like.
  • There is a direct link between work effort and reward, which sometimes doesn't exist as an employee.
  • You have more flexibility over the payment terms that you can negotiate.
  • You can work for multiple clients at the same time, on many different projects, which can also increase your pay.
  • Depending on your individual skills and the state of the industry in which you work (or the market in general) you can command very high rates of pay.
What Are The Dis-Advantages Of Being Self Employed?
  • You are responsible for the day-to-day running of the business.
  • You may have to undertake very  many disciplines in order for the venture to be a success i.e you may end up building the website as well as undertaking your trade..
  • Trying to get a decent level of income can take a long time.
  • You may have to have a second job in order to bring enough income in.
  • You need to offer a product or service for which there is demand. This may depend on projecting a certain image, perfecting a technique or making a product unique.
  • Expanding too rapidly, or conversely not being quick enough to seize a chance, may be detrimental to your business.
  • Working from home is the most effective when you have the space and facilities to do so. If you work from other premises, you will need to pay rent and other overheads.
How Do I Register With HMRC As A Sole Trader?

It is as simple as calling HMRC's "Newly Self Employed" helpline with your national insurance number.

What Records Are Sole Traders Required To Keep?

To be "bullet proof" you really need an accountant to undertake your book-keeping as it is a skill earned through many years of studying and sitting exams. The record keeping will consist of sales invoices, materials, CIS workings, full wages workings, premises expenses and so much more. On top of this an accurate record of all assets, liabilities and a bank reconciliation ...and that's just the start of it all! Our advice to clients is to concentrate on what you went into business for and leave the book-keeping to us, you will then have the time and energy to concentrate on building your dream..

How & When Is Tax Paid?

The tax year ends on 31 March (Also sometimes known as 5th April). The tax due for that year must be paid by 31 Jan along with any payment on account for the following year.

How Much Tax Will I Pay Being Self Employed?

Ideally as little as possible! As net profit goes up so does tax, however, there are things we can do to minimise this. Some of these solutions may be employing a family member, investing in capital (vans equipment etc) or perhaps paying into a pension scheme. Further advice can be given on enquiry.

Do I Have To Pay National Insurance?

As a self-employed person you will pay class 2 national insurance (that's the self-employed national insurance) along with class 4 national insurance (profits related).

Class 4 national insurance can be avoided if you switch over to trading as a one person Ltd Co.

When Do I Have To Charge VAT?

Currently, in 2017 the threshold is £83,000 pro rata based on a 12 week rolling average. In other words you don't wait until you reach £83,000, you instead measure it pro-rata .

How Do I Record Business Expenses?

All business related expenses must be supported by a valid invoice. If you have spent money on a business item but lost the receipt, write it down on a sheet of paper, we will put it through. Normally HMRC are okay with this if it is a reasonable amount.

Can I Claim The Use Of My Home As A Business Expense?

Yes, this is possible. HRMC state it is possible to claim back expenses for a room in your home, for the hours you use it purely for business purposes.

This means you can claim for electricity, heating and water, council tax and mortgage interest for the use of your home as an office space. You will need to take into account how many hours a week you are using the space and then calculate the cost of the room per hour. These amounts would normally be charged in your accounts to 'use of home as office'.

To be honest the ‘use of home’ allowance is a little complicated, and changes yet again if you become a Limited company and continue to work from home, so it is probably best to speak with an accountant to get the most accurate and up to date information.

Can I Claim For Travel Expenses?

You can claim for your car, rail travel and any other business related travel costs you incur. Although you should make sure that you keep hold of any receipts, to prove that the expense was incurred.

If your car costs you £10,000 to run in a year, and you use it 50% of the time for business, you can claim back £5,000.