Do I need to keep accounts as a sole trader?

Do I need to keep accounts as a sole trader?

Do I need to keep accounts as a sole trader?

Do I need to keep accounts as a sole trader? The answer is YES.

Sole traders need to keep accounts just like any other business, in order to work out how much tax is due to be paid.

This makes it essential to keep business accounts, and some of the most important records are the income and expenditure sheets. Tracking your income and expenditure is the best way to work out exactly how much you’re spending and what income is generated by the business. Just some of the important accounts you’ll need to create as a sole trader include:

• Business income record, detailing all the income into the business for the year
• Personal income, detailing any additional income you receive, such as investment income
• Expenditure, a record of all your business expenditure for the year
• VAT records if you’re registered for VAT
• PAYE records for any employees of your business

You’ll also need to keep accurate records of any grant income you receive from external sources.

What are a sole trader’s tax liabilities?

Sole traders are liable for tax, just the same as anybody else. You’ll have to pay tax on the income you receive from your self-employment, alongside national insurance contributions. If your income is over the VAT threshold you’ll also need to prepare VAT returns every quarter.

Should I open a separate bank account for my sole trader activities?

Although it’s not a legal requirement to open a separate bank account for your business, you will find it easier to maintain a handle on business income and expenses if you run a separate business bank account.

Do I need an accountant to help me with sole trader accounts?

Using an accountant to handle your self-assessment returns can relieve stress. If you’re really busy with your business, making the time to complete your tax return can be difficult. If you instruct an accountant to handle your self-assessment return you’ll just need to provide them with details of your income and expenditure for the relevant year, and all the hard work is eliminated.

SQK Accountancy offers accounting support and self-assessment reporting for sole traders in the Manchester area. Contact us today to discuss all the ways we can help you with your small business accounting.

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