Starting a business as a sole trader is relatively simple and a straight forward process, with very little initial costinvolved. The yearly accounts can be prepared by the sole trader and can be used as a basis for the completion of the self assessment tax return.
The business is run completely by the individual and all the profit is retained by the sole trader, without having to consider anyone else. However, there are risks attached to running a business as a sole trader, as debts are the responsibility of the company owner and could result in the loss of personal assets.
Benefits of a sole trader accountant
You can be sure that a qualified individual will be preparing your accounts and completing your self assessment tax return. This means that all allowable expenses and tax reliefs will be claimed, along with legitimate expenditure, including the cost of your accountant. The cost of a reputable accountant is typically outweighed by the expenses, allowances and reliefs which are claimed, reducing the tax bill.
An experienced accountant will prepare accounts and complete the tax return accurately, meaning that your tax calculation will be based on actual figures and the tax bill is correct. Preparing accounts yourself may result in errors, which could lead to paying either too much or not enough tax, incurring a penalty charge.
Tax returns have to be completed accurately and include all income and claims for expenses, allowances and tax reliefs. If a tax return compliance check is conducted by HMRC, errors may be found and a penalty will be charged.
Saving valuable resources
Running a business as a sole trader is time consuming and funds may be scarce. A sole trader accountant will be able to advise when it will be beneficial to incorporate as a limited company and maximise income. The preparation of accounts and the completion of a self assessment tax return is timely, which is why outsourcing to an accountant is recommended.
A sole trader accountant will often charge you less to prepare your accounts and tax return than they would charge a limited company; this is because a sole trader requires far less input than a limited company, and is therefore cheaper.
A reputable sole trader accountant will be able to save money for your business, leaving you free to concentrate on other aspects of the company, like finding new contracts.
You can get further details on our sole trader accounting services here
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We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!