With more than 3.5 million sole traders operating in the UK as of 2019 – a figure that has increased year-on-year ever since – it is important to recognise self-employed professionals constitute an important part of the national business community.
As a leading provider of accountancy services throughout the North East of England, we’re proud to assist more than 5,000 clients, including limited companies and sole traders of all shapes, sizes and niches.
By working for yourself and trading as a self-employed professional, you’re expected to set up and manage your own accounts. But with the bookkeeping world well known for its jargon, it can be difficult to determine exactly where to start. Sole traders need just as much accounting help as any other business, that’s why we’re here to help with the accounting basics no sole trader should forget.
Separate business from personal
Having a separate bank account that’s dedicated to your sole trader business can help draw and maintain the line between professional and personal finances. With a separate bank account, you can make managing your sole trader accounts as simple as it should be, and record income and expenses with ease and accuracy.
Keep up to date with current rates
Your tax returns will be submitted using Self-Assessment, a system that automatically calculates your tax and National Insurance Contributions (NICs). Being aware of the Income Tax/NI rates and Personal Allowance that apply to your income is however important.
Track your income and outgoings
When managing your sole trader accounts, things don’t have to get too complicated, especially in comparison to the bookkeeping guidelines limited companies have to follow. All you need is a carefully formatted spreadsheet to keep track of your income and expenditure from month-to-month.
Alternatively, bookkeeping software offers an automated, easy to manage system that can record your income and outgoings directly from the creation of invoices and money deposited in or deducted from your bank account to save time.
Record your business expenses
Sole traders have a right to claim expenses against their income. Whilst HMRC’s simplified expenses option provides an easy way to do just that, recording and claiming back expenses individually could save you much, much more.
Make sure you’re aware of the business expenses that can be claimed back. Allowable expenses include stock, equipment, advertising, postage, bank charges, travel, and even selected household expenditure. Whatever expenses you’re claiming, keep hold of receipts and other relevant documentation as proof of purchase.
Call on the experts
You don’t have to manage your sole trader accounts alone. We provide the solid, reliable, jargon-free accounting support and advice you need. Contact us to find out more about how we can assist you.
