Benefits of accounting for sole traders

One of the many advantages of operating as a sole trader is that it’s relatively simple to do your sole trader accounting. Then why do you require an accountant? There are numerous benefits of having an accountant at your side when your sole trader company takes off. Let’s take a look at some of them.

Is a sole-trader a single trader?

In essence the simplest terms, a sole trader is a basic business model that works well for a single person. As a sole trader you are the proprietor of your company without directors or shareholders and you keep all profits. The sole-trader can be described as self-employed however, they are able to employ staff. It’s simple to register yourself in the trading category. registration for sole traders may be done in less than 10 seconds online.

Why is it that a sole trader would require the services of an accountant?

Being sole traders doesn’t mean that you must do all the work yourself. A lot of sole traders opt to work in conjunction with an accounting professional.

The benefits from having an accountant sole trader include:

Saving money

The fee your accountant pays each month is an initial expense However, a competent accountant can reduce your expenses in the long term. They’ll accomplish this via tax planning. This requires some know-how and understanding of tax law – and make the most of your allowances through taking advantage of tax-free benefits you’re eligible for.

Some sole trader accountants may suggest a change in the company arrangement to help make the company more tax efficient. In the same way, it may be a challenge for a professional to realise that you could save thousands of dollars annually in taxes when you switch to a limited-company model.

No errors

Even if you’re proficient in maths, committing mistakes when filing tax returns is easy. If you’re among those millions who don’t have a mathematical mind the chance of making mistakes is more threatening. A simple error on your tax return could result in penalties or possibly even an audit by HMRC. When you employ an accountant to manage your finances, you’ll have a professional to help you. Be aware that accountants look over tax returns every day and have been trained to recognize things that you would never see making sure your tax return is error-free and flawless.

All expenses that can be paid

You’re probably aware of a myriad of items ranging from trains to tools which are business expenses that are tax-deductible in a sole trader’s self-assessment tax return, which results in a lower tax bill. Many people are aware that only items intended to be used by businesses could be billed as a cost However, some claims may be made for items that are in part for business purposes, but that also have personal usage. A lot of sole traders, particularly those who are novices, are unaware that they are eligible to claim these expenses, and therefore miss out on tax benefits. Read More: motosas

Never miss a date for tax due.

For the majority of us, our lives are busy. If you’re self-employed this may be particularly true. If you’re trying to balance your small family, business and time for leisure the tax deadlines may sneak up on you. A tax professional will make sure that your tax returns are completed on time which will save you from the last-minute rush to finish the Self-Assessment. It will also ensure that you do not miss an important tax deadline.

Better utilisation of resources

 Sole trader accounting is less complicated than limited company accounting requirements, however it consumes your time. Time you devote doing routine accounting can be better used elsewhere, for example, the day-to-day management of your company or the tasks that are essential to the success of your business such as customer service and building relationships.

Work/life balance

While our culture can celebrate work and create an environment of continuous “grind” and “hustle,” the reality is that in order to live a long-term life everyone needs the balance of work and family. When it’s time to spend with family activities, leisure, travel or just relaxing on the couch daydreaming it’s all important to have the time to shut off our minds.

Make sure everything is in place

It’s difficult to track each last invoice, receipt or expense VAT records, business transactions and bank records about the sole trader’s business. An accountant can help create business-specific records and utilise them to create your annual financial statements.

 Aid with HR

Contrary to popular opinion the sole trader can employ employees. The creation of a solid and reliable team is essential for the growth of your business, but the employees have to deal with many accounting administrative tasks. From establishing a payroll, to sorting PAYE taxes as well as National Insurance contributions, and determining benefits for employees like sick pay, a professional accountant can handle everything for you.

Make use of technology to organise your life.

Accountants are able to provide you with solutions to the issue of maintaining precise documents. Bookkeeping is a must for a successful sole trader enterprise However, traditional methods such as spreadsheets can put you in a bind.

A professional sole trader accountant will offer cloud-based accounting software along with HMRC and other banking systems. The software allows you to keep track of your bills, generate VAT invoices, track the financial transaction and then reconcile and manage payroll.

Improve your chances of getting a loan.

Even if your business doesn’t require an investment loan from a bank, you never have a clue about what’s coming for your company in the near future. An era of rapid growth or even gradual growth might need a loan to pay for the cash flow.

Then you’re in a better position to meet with an investor with an argument for your business with a proven history of your formal accounts created by a professional, and will be able to demonstrate the efficiency and profitability of your company.

A few words to the future

Finally An accountant may be able to offer an individual trader continuous guidance. As a sole proprietor it can be difficult to feel that you’re on your own when it comes to making plans for the future of your business. If you have a competent accountant however, this doesn’t have to be the scenario. It’s just one telephone call (or an instant messaging) to your accountant’s many years of experience and knowledge in business that will be invaluable for sole traders who have the goal of growing.

It is recommended that you also collaborated with a seasoned limited company accountant. They’ll be on your side as your business grows, taking the stress off of you by preparing reports as well as tax returns for you. They’ll be prepared for quick submission to the appropriate authority. If you’d like to know the details about our accounting services for companies Please don’t be afraid to contact us!

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