Accounting Tips For Sole Traders

Dealing with your accounts can be a daunting prospect for any sole trader, it can be a difficult struggle to keep on top of business accounts throughout the tax year and can be a nightmare if it's not done correctly, it can end up costing you a lot of time and money. There are a few things you can do to support yourself throughout the tax year to make the prospect of accounting easier on yourself. 

Firstly, you need to be aware of things like tax and national insurance or any other factors and records you may need as a sole trader. Bookkeeping services can certainly help to alleviate any additional stress for you and your sole trader accounting, especially if you are tackling self employed accounting.

Tips For Looking After Accounts as a Sole Trader

There are a few options you can try to take away the stress that looking after your accounts can cause. Like anything, it may take you time to set this all up or get your head around and that is how having support from an accountancy firm can support you and your business.

Open a Bank Account For Business Use

Consider opening a separate bank account for business use only. This is not a legal requirement and so is not a step all sole traders take, however, having your business account separate from your personal account can help to give you a clearer perspective over your incomings and outgoings, including expenses and unexpected bills. This can also be incredibly helpful if you are looking to expand your business in the future and lease a property to work from.

Continually Save For a Tax Return

You will need to save for your tax each year which is recorded in your self assessment. To complete the self assessment you will need to be confident that you know certain details such as your national insurance contributions and income tax thresholds.

Focus on Bookkeeping

Be sure that you keep on top of your bookkeeping, for a small or relatively new business a spreadsheet will be absolutely fine for this, google has free spreadsheets called Google Sheets which can be accessed via any device you are logged into and are easy to use. Alternatively, there is bookkeeping software you can subscribe to which can download information directly from your bank to save you the task of additional inputting at the end of each day/week.

Claim Back From HMRC

Know what you can claim! As a sole trader, there are certain business expenses that you can claim back from HMRC. Take a look at a complete list here.

Register For VAT if Applicable

If you have a turnover of more than £85,000 per year you must register for VAT. You can register for VAT even if you haven’t reached the threshold. There are favourable schemes, for different types of trades which may be beneficial to utilise before you even reach the mandatory limit for registration. If your business is looking to expand in the future, VAT registration can also be advantageous.. 

When to Hire an Accountant?

As a sole trader, we hope that the accountancy tips provided within this content is beneficial for you and will help you with your bookkeeping. There are certainly benefits however from hiring a professional and experienced accountant to help you along the way. By hiring an accountant they will be able to identify errors which can save you from unexpected costs in the long run, an accountant will also look at ways in which you can save money throughout the year wherever they feel it is possible. A professional business accountant will also make sure that you take advantage of any tax reliefs and allowances that you may not know you are entitled to.

You can hire an accountant at any point, with many sole traders finding that when they do take the leap, the help from a professional actually costs less each year than they were paying in incorrectly done taxes, and the loss of their own time away from the core business.

For more information on Barnstone Accountancy and how we can help you as a sole trader, give us a call on 01572 811 497 or email us at enquiries@barnstoneaccountancy.co.uk. Alternatively, please complete the contact form on our website to schedule a free 30 minute phone consultation.