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Sole trader accountant.

As a sole trader do I need an accountant?

While setting up as a sole trader is very straightforward, doing your books may not be if you’re not experienced in all things tax.

Accountants for sole traders

With the progression of technology and online connectivity you no longer have to seek accounting services for sole traders close to where you live or do your business.

In fact it could be detrimental to you as traditional accountants tend to charge more because they’re less efficient.

These days there are plenty of online accountants for sole traders who offer a simple monthly subscription which usually covers all the tax and bookkeeping needs of a sole trader.

Do I need an accountant as a sole trader?

Whether you need an accountant as a sole trader depends on various factors and your personal financial situation. Here are some key considerations:

  • Complexity of Finances: If your business finances are relatively simple, you may be able to manage them on your own using accounting software. However, if your financial affairs are more complex, an accountant can provide valuable expertise.
  • Time and Expertise: Consider whether you have the time and expertise to handle accounting tasks effectively. Hiring an accountant can free up your time and ensure accurate financial management.
  • Tax Efficiency: Accountants can help you maximize tax deductions and minimise liabilities, potentially saving you more money than their fees.
  • Compliance: An accountant can ensure that you meet all legal and tax obligations, reducing the risk of penalties or audits.
  • Financial Planning: Accountants can also assist with long-term financial planning and business growth strategies.

While it's not mandatory to have an accountant as a sole trader, many find their services beneficial for financial peace of mind and optimized business finances. Consider your specific needs and budget when deciding whether to hire an accountant

What does an accountant for sole traders do?

An accountant can play an important role in helping sole traders manage their finances and tax obligations. There's a long list of tasks that an accountant will perform:

  • Bookkeeping: As a sole trader, you must maintain accurate financial records. An accountant will help with tracking income, expenses, and other financial transactions related to the business.
  • Tax Planning: A good accountant keep ahead of tax rules and changes to that they can help sole traders be tax efficient.
  • Tax Return Preparation: The most important function of an accountant is to prepare and file your annual self-assessment tax return.
  • Financial Statements: As a sole trader running your business, you may require from time to time to show certain financial statements, such as profit and loss statements and balance sheets. Your account can produce a clear picture of your financial position.
  • VAT (Value Added Tax) Management: Even as a sole trader you can be registered for VAT. An accountant's services are usually required with VAT registration and VAT return preparation which can be complex.
  • Record-keeping tools: Accountants often provide record-keeping tools such as Freeagent and offer advice on best practices to financial records organised.
  • Payroll Services: For sole traders with employees, accountants can handle payroll processing, including calculating wages, handling tax deductions, and preparing payroll reports.
  • Tax Compliance: By having a qualified account, you ensuring that you comply with all tax laws and regulations.
  • Representation: It's helpful to have an account, should you be audited by HMRC.

Sole trader bookkeeping

Once again technology makes keeping track of your incomings and outgoings a breeze. No more shoeboxes filled with receipts.

As a sole trader you should set up a dedicated sole trader business account which you can then connect with your accountants’ bookkeeping software.

All transactions are automatically shared from your bank account to your online bookkeeping account, saving you the time to input any items manually. It’s still good to keep the receipts or you can upload them to your bookkeeping account.

From time to time you’ll just need to allocate your expenses, explain any other transactions and your accountant will do the rest.

Sole trader accountant cost

The cost can vary depending on your approach. You can do your own bookkeeping and only engage an accountant to do your self-assessment or you can sign up for a regular service and have someone else to take care of your tax affairs.

Traditional accountants will usually expect you to do your own bookkeeping which they’ll check at the time you engage them to prepare your self assessment. Depending on the scope of your business, the cost can be still a few hundred pounds plus VAT.

Online accounting services for sole traders start at little as £45 a month and come with bookkeeping software, unlimited advice and all tax services included. While it may be a little bit more expensive, you’re likely to save a lot of time and be on top of your balance sheet at all times.

Can I do my own accounts as a sole trader?

You absolutely can. There is no legal requirement for sole traders to have an account.

However, you are likely to miss something unless you are continuously self educating yourself on tax. Every year the UK government tweaks tax rules and regulations and more often than not these have some impact on sole traders.

Unless you’re an expert on sole trader accountancy matters, you might find that your approach to save has in fact cost you.

Get the right insurance

Sole trader accountancy firms are good at keeping an eye on changes in legislation and tax rules so that you don’t fall short of your obligations. They also often include complimentary services such as sole trader business insurance recommendations, access to dedicated telephone helplines providing qualified advice on legal and other matters.

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