There are many people who start their business as a sole trader and then later on they incorporate it as a Limited Company. However, being a sole trader business involves some personal financial risk. Sole traders must pay their debts if their business fails.
You must register your sole trader/self-employed business with HMRC as soon as possible (even if you are only running your business on a part-time or casual basis), otherwise HMRC may charge you a penalty.
Additionally you will pay income tax on any business profits by filling in a self-assessment tax return each year, stating your income and expenses. You will have to make flat-rate Class 2 National Insurance contributions (NIC) and also Class 4 NIC if your annual profits exceed the annual limit. The NIC payable along with your income tax is calculated from your self-assessment tax return.
You must keep detailed financial records for your business, as well as proof of any expenses (such as receipts, invoices, utility bills, etc). All of these are necessary when your tax returns are due.
At TWP, we provide an accounting and tax planning service for self-employed professionals that is straightforward and reliable. Our service can save you time and money since we will liaise with HMRC and various other organisations on your behalf. Additionally, we use the latest financial software to complete your tax return.
Our accounting and taxation team have the knowledge and experience to provide you with all the information needed for sole traders, and are available throughout the year to provide solutions to all your taxation queries. We provide a wide range of services, including;
- self-employed tax returns;
- managing expenses and freelance invoices;
- supporting self-employed documentation and HMRC correspondence;
- assisting with maintaining your records electronically including registration, VAT returns and complying with the new Making Tax Digital (MTD) arrangements; and
- financial planning and strategy for sole traders.