Sole Trader Archives

News,May 2018

Does a Sole Trader Pay Corporation Tax?

Mia Hamilton17/12/2024corporation tax , Sole Trader

In the UK, there is more than a 50% ratio of self-employed individuals who work as sole traders and have registered themselves. This number of sole traders carrying out business activities rises every year. The primary reason for the tendency of this increasing number of sole traders in the UK is that it is the most simple and suitable business structure, especially when it comes to business startups. One of the prominent benefits of being a sole trader is that you can start the business right away without having to deal with a lot of paperwork, and the chances of autonomy are higher. However, the tax obligations are higher if you opt for this business structure. This is because, as a sole trader, you will stand accountable for your business losses and debts. But does a sole trader pay corporation tax, we will talk about it in the discussion below. Continue reading to find your answers. Get in touch with our young, clever, and tech-driven professionals if you want to choose the best accounting services in Croydon. What Taxes do Sole Traders Pay in the UK? A sole trader is obliged to pay national insurance contributions and income tax for carrying out business activities in the UK. In some business situations, if the annual threshold of business exceeds the limit, then such a sole trading business will also pay value-added tax. This limit is normally imposed on businesses by HMRC. It is a common perception among business owners that opting for a sole trading structure can make you pay more taxes than a limited company and an LLP. However, there are some tax-efficient ways to cut down on this burden of tax a little. One of the popular ways in this regard is dealing smartly with pension contributions, this can also lead to a safe retirement. When Does a Sole Trader Pay Tax? The sole traders are not obliged to get their company registered with HMRC as a separate legal entity because the owner and business are considered to be the same entity. However, they still need to get a unique tax reference number known as UTR. Furthermore, a sole trader is obliged to pay the income tax along with the national insurance contribution. If the criteria are met and earning exceeds a certain threshold, there will be a value-added tax as well. Before all other tax obligations, sole traders are required to submit self-assessment tax returns on a specific deadline. Once most self-assessment tax returns are submitted, sole traders will get a notification from HMRC to inform them about the exact tax bills and the deadline to pay them. This amount mostly depends on the declared income from the sole traders to HMRC, so ensure it has to be accurate to get the accurate tax bill. Does a Sole Trader Pay Corporation Tax? A sole trader is not obliged to pay corporation tax or submit tax returns like other limited and limited liability companies in the UK. Instead of this common obligation among businesses in the UK, sole traders, however, go for self-assessment tax returns to submit self-employed tax. Corporation tax is mostly for limited companies when they exceed a certain threshold in the UK for carrying out business activities. Mostly, the businesses that are associated with trading, selling business assets, and investing for profits within the UK or abroad are liable to pay corporation tax. If your business idea opted for the sole trading business structure, you would be free from the obligation of paying corporation tax. How Much Tax Does a Sole Trader Pay? As mentioned earlier, the sole trader business structure is not known to be very tax efficient in comparison to limited companies or LLPs. A sole trader deals with mostly two and otherwise more than two types of taxes, and the rates are different for them. If your annual profit is higher, your tax amount will be higher as well in case of being a sole trader. If your annual income in the tax year is within the limit of the personal allowance, this income will be tax-free. However, in case you are earning more than the personal allowance amount, your income will be taxed at different rates according to the amount you are earning annually. So, if your income is between £12,571 and £50,270, you will pay a basic tax rate of 20%. If your income is between £50,271 and £125,140, you will pay a higher tax rate of 40%. Finally, in case of earning over £125,140 annually, you will have to pay an additional tax rate, which is 45%. How can Sole Traders Reduce the Tax They Pay? Sole traders need to be very cautious about any schemes that offer them a reduction in their tax bills or that there will be near to no tax for them. Most of such schemes are non-compliant, and you must avoid them, or you will end up damaging your business reputation and will have to deal with hefty amounts of penalty. The most legitimate and tax-efficient way to reduce the tax liability as a sole trader is to claim all possible business expenses. This can even incur the business expenses to run the necessities in the business. You must learn the criteria to claim the expenses, and you will minimise the tax burden automatically if the claim is successful. The Bottom Line In conclusion, by now, it must be clear that ‘does a sole trader pay corporation tax’. They do not pay corporation tax. However, they pay national insurance contributions and income tax. In some cases, if the annual thresholds exceed the limit, there will be an obligation to get registered for value-added tax and pay it as well. So, going through the process of sales and tax returns, the process is simple, but new businesses and sole traders might find it hard for the first time, especially when the business records are not organised efficiently. If so, you are no longer alone in shouldering your …

What is MTD for Self Assessment?

Mia Hamilton09/11/2023Sole Trader , tax , Tax Issues , Tax News and Tips , Tax Saving Tips

Making Tax Digital (MTD) for Self-Assessment is an initiative introduced by HM Revenue and Customs (HMRC) in the UK to modernise the tax system and make it easier for self-employed individuals to manage their taxes. When it’s time to submit your tax return, you can use the digital records to complete and send your return to HMRC directly through the compatible software. Let’s embrace the digital era and simplify our tax obligations. Reach out to our smart and clever-minded guys to get an understanding of the tax set of rules in the UK queries answered quickly. We will help to understand your queries instantly. Is the Self-Assessment Tax Going Digital? Self-assessment tax is indeed going digital in the UK. The government has introduced Making Tax Digital (MTD) for self-assessment, which requires individuals to use digital tools and software to keep records and submit their tax returns. By embracing digital methods, individuals can easily manage their tax obligations, reduce errors, and ensure timely compliance with HMRC regulations. It’s a significant step towards modernising the tax system and embracing the benefits of technology in simplifying tax processes for individuals in the UK. Okay, So What will be Different? With the implementation of Making Tax Digital (MTD) for self-assessment in the UK, things are going to be different now. Previously, individuals would manually fill out paper tax forms and send them to HMRC. This means no more paper forms and manual calculations! Instead, individuals will use digital tools to submit their tax returns online, making the process more efficient and accurate. It’s a big change, but it’s designed to simplify the tax process and ensure better compliance with HMRC regulations. So get ready to embrace the digital era of self-assessment tax in the UK. What is Making Tax Digital for the Self-Employed? MTD, or Making Tax Digital, brings significant changes for self-employed individuals. This shift from manual record-keeping to digital methods aims to streamline the tax process and improve accuracy. With MTD, self-employed individuals will be required to submit their tax returns online using digital tools, eliminating the need for paper forms and manual calculations. This digitalisation allows for more efficient record-keeping, easier access to financial information, and a smoother tax-filing experience. So, self-employed folks, get ready to embrace the benefits of MTD and enjoy a more streamlined approach to managing your taxes. When Does MTD for ITSA Start for the Self-Employed? The proper implementation will begin in April 2026. The implementation of MTD for ITSA is being rolled out in stages, with different groups of taxpayers being brought into the system at different times. However, the government has plans to expand the scope of MTD for ITSA to include more self-employed individuals in the future. So, if you fall under the threshold, it’s essential to stay updated with the latest announcements from HM Revenue and Customs (HMRC) to ensure compliance with MTD requirements. When is the Deadline for MTD for ITSA? Generally, the deadline for submitting your self-assessment tax return is January 31st following the end of the tax year. However, it’s important to note that MTD for ITSA has different deadlines for record-keeping and submitting returns using digital tools. Do All Self-Employed People Have to Go Digital? Not all self-employed people are required to go digital for MTD (Making Tax Digital) regarding their tax obligations. As of now, the digital requirements for self-employed individuals under MTD are based on their annual turnover. If your annual turnover is below the VAT threshold, you are not currently mandated to keep digital records or submit tax returns using compatible software. However, it’s always a good idea to stay informed about any updates or changes in tax regulations that may affect you. What is the Procedure to Sign Up for Making Tax Digital for ITSA? To sign up for MTD for ITSA (Making Tax Digital for Income Tax Self-Assessment), you can follow a few simple steps. Follow the prompts to enrol for MTD and link your compatible software or digital tools to your HMRC account. If you’re unsure about any steps, HMRC provides guidance and support on their website, or you can reach out to them directly for assistance. Embrace the digital era and make tax management a breeze. What is Required to Submit for MTD for ITSA? When it’s time to submit your tax return, you’ll use the digital records to complete and send your return to HM Revenue and Customs (HMRC) through the compatible software. It’s important to ensure that your digital records are accurate, complete, and in line with the MTD requirements. If you have any specific questions or need further guidance, HMRC is the best source for detailed information. What is MTD Software for the Self-Employed? MTD software for the self-employed refers to digital tools or software that helps self-employed individuals manage their tax obligations in line with Making Tax Digital (MTD) requirements. These software solutions are designed to simplify the process of record-keeping, submitting tax returns, and staying compliant with HM Revenue and Customs (HMRC) guidelines. MTD software for the self-employed typically allows you to keep digital records of your income and expenses, calculate your tax liability, and submit your tax returns directly to HMRC. There are various options available in the market, so it’s important to choose a software that suits your specific needs and is compatible with MTD for Income Tax Self-Assessment. The Bottom Line In conclusion, MTD for Self Assessment is a digital initiative by HM Revenue and Customs (HMRC) that aims to modernise the tax system and make it more efficient for self-employed individuals. By requiring digital record-keeping and digital submission of tax returns, MTD streamlines the tax process and reduces the chances of errors. It also encourages better financial management and allows for real-time visibility of tax liabilities. While it may take some adjustment to transition to digital record-keeping and use compatible software, MTD ultimately offers benefits such as easier tax management, improved accuracy, …

What is an LP10 Letter and How to Get it?

George30/10/2023Sole Trader

Are you looking for more information on the LP10 or the Lorimer letter? Read this blog till the end. The LP10 letter was introduced first in 1993 as a way to allow freelancers to be considered self-employed. It encompasses many benefits to the holder by reducing the tax. But what exactly is it, and how do you get one? Join us as we explore the intricacies of an LP10 letter. We will start by describing it clearly to the audience. Then, you will be given the eligibility criteria for an LP10 letter, followed by who can apply for it. Lastly, you will be given a short guide to help you apply for an LP10 letter. If you need more information, visit CruseBurke! What is an LP10 Letter? An LP10 letter is a document provided by the HMRC to a person’s employer. The letter states that you should be treated as a self-employed person and therefore not be taxed under the PAYE system. The letter ensures that a person who is self-employed is taxed appropriately instead of having to file a tax return at the end of each year. This letter is provided to only short-term employees who do not want to fall under the PAYE system. What is the PAYE system? The pay-as-you-earn, or PAYE, system allows the employer to deduct taxes from the salary of their employee. In addition to this, employers can also deduct the National Insurance Contributions (NICs). This amount is deducted on behalf of HMRC and paid to the regulatory body. So Why is There a Need for a Lorimer Letter? If you are a freelancer or a person who is self-employed, you probably file your taxes yourself. Therefore, when an employer deducts your salary for the tax and NIC on behalf of the HMRC, you are overpaying the tax. Not only are you paying your tax as a self-employed individual but also as an employee to the person who you work for on a short-term basis. Although you can apply for tax rebates, it can be frustrating as they are paid by the end of the tax year. That is why you need an LP10 letter. Are You Eligible for an LP10 Letter? A Lerimor letter is provided to those individuals who are freelancers and work on short-term contracts. This is to ensure that they are not overpaying their taxes. In addition, to apply for the letter, you must also fulfil the following requirements: Be a self-employed sole trader You must have an NIC and a UTR number Evidence of multiple short-term employment contracts The work you are applying for must be for less than 10 days Proof that you are in control of your work Who Can Apply for an LP10 Letter? Although the letter is mostly associated with the film and television industry, it is applicable to multiple sectors. This includes arts, literature, finance, education, healthcare, IT, and others. Here are some of the cases to help you clarify: If you are a writer hired to write a single article for a newspaper. If you are a plumber hired to make fixes in a client’s home. If you are a musician hired to play at a wedding. How to Apply Yourself! If you are looking to apply for an LP10 letter, make sure that you are eligible. Although we have given the eligibility criteria above, it is recommended to study the rules thoroughly. To start the procedure, contact HMRC or visit their website. You will be required to show a 12-month employment history. Once you get the letter, it will be applicable for 3 years. After the end of the period, you will need to apply for it again. If you are looking for a reliable accounting partner as a self-employed person, contact us! A Quick Wrap-Up An LP10 letter is provided to those self-employed sole traders who work on short-term contracts. The letter is provided by the HMRC to the employer who employs a worker for less than 10 days. This letter asserts that you should not be charged under the PAYE system and provided with a gross salary if you are a worker. The letter ensures that freelancers who work on short-term contracts get their salary on time without any tax deductions as they file their taxes separately. This ensures a smooth tax system instead of applying for tax rebates at the end of the year. We at CruseBurke understand that the UK’s tax structure is complicated and therefore provide you with the best tax advisory and accounting services in the UK. Click here to get an instant quote.

What is Payment on Account? A Simple Guide

George10/01/2022Accounting Issues , Sole Trader , Tax Issues

As a UK taxpayer, if you’ve submitted your tax return, you can check out your self-assessment tax bill to know: what you owe to the HMRC? How you will pay that amount to HMRC? When you will pay it? To find out, you need to understand ‘Payment on Account’. If you have paid below 80% of your tax at source (like via PAYE) and your tax bill is over £1,000, HMRC may ask you for payment on accounts. Let’s learn: What is POA? How to calculate POA? What if your income is smaller or higher next year? How to check the amount you owe? Is POA optional? If you want a professional accountant and bookkeeper for your company, we can help you. Our bookkeepers and accountants at CruseBurke are qualified and cost-effective. We save your time, money, and stress by handling all your finances and business problems in no time. Contact us now! Understanding Payment on Accounts If you pay the tax bill via self-assessment, you may be required to make tax payments twice a year (two instalments) to spread the cost of the next year’s income tax, this system is known as payment on accounts. It is calculated based on your previous year’s tax bill and settles the tax you owed from the tax return. The amount you pay for each POA will be half of your previous year’s tax bill. POA means you pay tax in two instalments: In January (deadline to pay tax bill) And in July In case, if you have already paid over 80% of your tax bill in January, you don’t need to worry about POA as you will not be charged again in July. How to Calculate Payment on Accounts? POA is calculated based on the previous year’s tax bill about your future income. It will then be paid in equal instalments, so it means that the half payment will be made in January and half in July. Suppose if you have a £2,000 tax bill for this year, you’ll be paying POA in two instalments totalling £2,000 for the upcoming year’s tax bill. It assumes that you will make roughly the same income or more that you did last year. If you make the income more and your tax liability increase, in such case you just pay off the balancing amount on 31 January. What if Your Income is Smaller or Higher Next Year? If your income is smaller next year, you may contact HMRC to bring down your payment. You can do it through: HMRC online account and click on “Reduce Payments on Account” print and post the SA303 form to your HMRC However, it is recommended to pay the POA as it is. If HMRC found that your profits are down, the difference would be refunded by HMRC. In contrast, if your income is higher, you need to make a balancing payment by 31st January next year to update your account. We can register you as self-employed to HMRC on your behalf. Fill out this form and let us handle everything. Call us on 020 8686 8876 or email us today! How to Check what you Owe? To check it, you first need to sign in to your online account. Then, you need to click the view statement. There you will find: the payment you made before your next paments Is POA Optional? POA is not optional rather it is mandatory, once you are done submitting your Self Assessment tax return, you’ll be automatically enrolled in it. You may not be enrolled if: you’ve already paid 80% over of the total tax amount you owe (like via PAYE) your tax bill from Self Assessment was under £1,000. Quick Sum Up We hope that after giving it a read, you have now got a basic understanding of what is payment on accounts, how to calculate it, what if your income is smaller or higher next year, how to check what you owe, is POA optional. Payment on account is the system to pay the tax bill in two instalments, first in January and second in July. Generally, self-employed make this payment as an additional self-assessment tax payment. Turn to us if you need any help with accounting, tax payroll, and other finance-related problems! We will solve you are all your business issues in no time and at an affordable price! So, contact us now! Get an instant quote from our accountants for the services you’re looking for! Disclaimer: This blog contains general information on POA.

How does HMRC Define a ‘Personal Service Company’?

George06/12/2021Business , Limited Company , Sole Trader

Sometimes the contractor set a company to provide their services to the clients that are known as PSC (Personal Services Company). This has been observed that agencies and clients prefer personal service companies over sole traders or people who work individually. The reason behind this could be the one that comes in between while you are hiring a sole trader, the relation is still considered as employer and employee, not contractor and client. This way the client is responsible for sick pay and other holidays. By now you must be wondering what is a personal service company? Before we delve into further discussion, let’s have a look at the points of discussion in this article, this includes the following: What is a Personal Service Company and why to Set up? Client Benefits The Bottom Line Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. What is a Personal Service Company and why to Set up? As discussed earlier a personal service company is set up by a contractor to provide their services to the clients. The question that arises here is that why do contractors set up the PSC? This is because it seems the best option out of all the options to get the work in the fastest way possible. If the contractors want a quick response at work, setting up a personal service company is the best way to get it. Out of several benefits that the contractors get from the PSC, the most prominent happens to be tax efficacy. A fusion of salary and dividends goes to the contractors as their income. This makes them avoid paying the employee-employer national insurance and other such deductions as well. This can make a big chunk of take-home pay come home without a lot of deductions. Get in touch or arrange a meeting, explain your requirements, or sign up online. Client Benefits: Often people dream to manage work in a way in which there are chances to avoid the relationship of employee and the employer. There are many more benefits for the client that come with the offer, this includes the following: Reduced risk of getting to hire an organisation but a single person who is considered as a company as well. The option of seeing the contractor in case things don’t go as planned makes the clients feel safer. For a better protection factor, the hiring process may include the agency before giving the authorisation. This can further work like a one-stop-shop in which there is a search of the need-based skilled contractors for the business projects. Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! The Bottom Line: Now that you have developed a better understanding of What is a Personal Service Company, we can sum up the discussion by saying that a number of client benefits come with the offers made by the contractors who work as a PSC. However, if to ensure the seamless working of the process, professional help can help you decide what is the most beneficial and suitable option for you as a client. We hope this basic guide developed a better understanding of personal service companies and relevant details. Seek professional help with Accountants in London. Get in touch or ask our accountants about your concerns. Disclaimer: This article intends to provide general information based on What is a Personal Service Company.

A Basic Guide to Become A Successful Sole Trader!

George03/12/2021Sole Proprietorship , Sole Trader , VAT

A sole trader is a person who is self-employed and owns a business. According to research, about 60% of UK businesses are sole traders. This business structure is popular because of the simple ways to get into trading as well as the paperwork is minimal. However, sole trader advice by professionals will always be helpful before you plan to begin. By now, you must be wondering that if it is the right option for you to opt for sole trading. Maybe you are already into working as a sole trader but look for new ways that can push your business toward success. This article is designed to provide the best and easiest tips to make your trading history a success story. Before we delve deep into the discussion further, we need to have a look at the focused points of discussion in this article. This includes the following: Sole Trader Advice to Be Successful Dedicated Bank Account Registration Process VAT and Tax Focused Skills for Business Work Place The Bottom Line Speak to one of our qualified accountants? Give us a call on 020 8686 8876 or request a callback. Sole Trader Advice to Be Successful: To be ensured that you want to be a sole trader, it is important that you gather enough information based on the drawbacks and advantages of becoming the one. The advantages that come with this structure cannot be denied. Like: Business control all by yourself Hire people that suits you and the work needs with your own choice. The greater degree of privacy factor about your business Pay tax on your benefits and keep the rest The business can be closed in an easy way than is the case in a limited company. You only have to clear your debts, gather the money and notify HMRC about the business closure. Moreover, there are several drawbacks that are needed to be considered before taking the plunge in sole trading, this will further help to make the right decision. The freedom and independence that come with working as a sole trader are the prominent factors to the tendency increasing for this. Below are certain tips discussed to be successful. Dedicated Bank Account: Many people seek to have a dedicated account to fulfil the needs of the business finances. Maintaining a separate account for business finances is a better idea to be clear about your business and money. This will allow you to have a clear view of your income and expenses. Registration Process: It is very important to get yourself registered as a self-employed person with HMRC once you start trading. This will help to declare the status. The year in which you started working as a sole trader, you can register by 5th October after the tax year has ended. Late registration might cause penalities. VAT and Tax: As HMRC explains, a sole trader has to pay self-assessment tax returns every year and for that, it is a must to keep a track of your income in a fair manner. This does not matter if the business has yet started to make profits or not. On a tax return, the since and business expenses are declared as well. Moreover, you have to register for VAT if your annual turnover goes above £85,000. Focused Skills for Business: In the process of becoming a business owner, things you are dealing with at the same moment become overwhelming for you. The development of your business skills is equally important. The business owner must take part in the conferences, courses and event shows to be updated. By having a command of professional skills, you can do the following: Find new clients easily Be updated about the market demands and changes Process different skills as a professional Work Place: The dream of becoming your own boss and going for self-employment is to seek the balance in professional work life. It comes with several advantages but the factor of being lonely is when you don’t have enough company in the surroundings for the interaction. Working from home means there are more chances of being distracted as well. The factor of productivity goes low because of the house chores interruption. It is here suggested that the workplace from your home should be a well-managed room or side that can easily separate your mind from your personal life. Some other benefits that choosing a better workplace will bring include the following: Discipline Workday and dress properly before you enter into your workplace Enter in professional work mode Choose your suitable working hours Enjoy your lunch breaks The Bottom Line: Now that you have developed a better understanding of the Sole Trader Advice, we can sum up the discussion by saying that becoming a sole trader comes with prominent and undeniable advantages as discussed in the article but being self-disciplined will help you achieve success as a sole trader. We hope this article helped to develop a better understanding. Therefore, look no further other than CruseBurke. We offer comprehensive accounting and taxation services to Sole Traders only at £25 per month. You may create your own unique package here. Disclaimer: This article intends to provide general information based on Sole Trader Advice to be successful and relevant details.

I’ve Started a Business – What Do I Need to Do Now?

George02/12/2021Business , Limited Company , Sole Trader

Have you just thought about getting into a new business and wondering how you can join a networking group? Getting your business an enchanting logo and looking for unique ways to attract customers can be the pretty fun part of the beginning. However, do you ever think that “do I need to register my business” while you are enjoying the marketing of your business, a couple of finance matters need research for better implementation as well. Once the finance part is stable, you are good to focus on good marketing strategies and ready to enjoy the business growth. Before we delve into further discussion, we need to have a look at the focused points of discussion in this article. This includes the following: Choose between Self Employment or Trade Through Limited Company Limited Company – Incorporate Do I Need to Register My Business? Business Account Consider the Deadlines The Bottom Line looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Choose between Self Employment or Trade Through Limited Company: According to a famous saying choosing the right path means you are halfway there already. Giving time to seriously consider the pros and cons of being self-employed or trading through a limited company is a wise suggestion here. The need in the case of trading through the limited company is to develop one first before making purchases and invoicing the customers. Several people tend to choose self-employment at the development stage and then plan to switch to a limited company. However, an important factor to consider here is that you can’t go to self-employment if the trading through a limited company has started in the business. Do you seek professional help to know the right business option for yourself? Get in touch with one of our experts to get instant help on your business matters. Do reach out today! Limited Company – Incorporate: Once you are sure that trading through a limited company would be beneficial for you then you should: Start gathering the ideas to set up your own company. Seek a professional accountant to help you to incorporate the limited company. Look for a unique company name and be sure that name is not already taken. Fill the required forms and you will find the companies house to be with you in every step. Do I Need to Register My Business? Registration is an important part of the fundamental stage. If you plan to go self-employed, contact HMRC for self-assessment. This fulfils the purpose that you are bringing into HMRC’s knowledge that you are a person who is self-employed. By doing so, you will be bound to pay tax returns at the end of the tax year as well. In case you have started your business in May, you are not required to inform HMRC instantly but you can do the needful by the end of October. Business Account: Setting up a business account is the basic step that you must do even before the business is set up. Due to the reasons: It will be easy for you to check the business profitability. Accountancy fees will be reduced due to the fact that bookkeeping is way easier because of fine tracks. HMRC investigations will not reach out to your personal information. Moreover, in the case of a limited company, one thing to consider is that the business account must be in the name of your company. Due to the fact that personal accounts or the accounts without company names carry the money that is treated as it is removed from the company. Consider the Deadlines: Track your deadlines in your personal diary in case you choose to be self-employed. Every tax year will require self-assessment tax returns. The tax year starts from 6 April and ends on the 5th April of the coming year. Tax returns must be completed by the following January. For instance, you have started your business in May 2019. The first tax return is from 6 April 2019 to 5 April 2020. You can submit your tax returns as well as your tax bills by the end of January 2021. The Bottom Line: Now that you have developed a better understanding of do I need to register my business and relevant details, we can sum up the discussion by saying that starting a business may sound fun in the initial stage, however, there are certain challenges that might meet you along the road. By following the discussed information, you can make it a seamless process. We hope this article helped to develop a better understanding. Seek professional help with Accountants in London. Get in touch or ask our accountants about your concerns. Disclaimer: This article intends to provide general information based on new business development ideas and answers do I need to register my business.

Can I be Self-Employed and Employed at the Same Time?

George18/10/2021Payroll & PAYE , Sole Trader , Taxation

If you’re looking for a way to increase your income while still working full-time, you might be thinking if you can be self-employed and employed at the same time. The short answer is a resounding yes! If you’ve already had a full-time job while running your own business, you’re probably aware of the liabilities that come with it. Therefore, if you have never been through this situation, then read this blog till the end! We will inform you about its advantages, the tax to pay with, and its further details. So, let’s start! Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! Can I be Self-employed and Employed at the Same Time? Yes, you can. For instance, you work for an employer/company throughout the day, but in the evenings or at night, you work for your own business. When you run your own business and are solely responsible for its success or failure, you are considered self-employed. On the other hand, you are an employee or employed when you work for an employer on their own payroll and you are paid through it. If you fall under both categories, you are both self-employed and employed at the same time. The money you earn from your job will be taxed under Pay As You Earn, and you’ll need to file a Self-Assessment Tax Return to declare the income you made from your own business. Advantages of Being Self-employed and Employed The advantages are valuable, although they are simple. One of the main reasons is taxation. Several employment ways and forms of income are taxed differently. So, by taking advantage of your possibilities, you can save your money. Moreover, having your own business while working for someone else can be a great source of prosperity and mental satisfaction that you will not find anywhere else. How Does Tax Work If You are Self-employed and Employed? The income tax and NI (national insurance) implications can be complicated in case you are self-employed and working for another employer at the same time or are changing from self-employed to employed or vice versa. You have to inform HM Revenue & Customs immediately as you become self-employed even if you are also working for someone else at the same time or you have already completed a tax return every tax year. You should not inform them late (when filing a tax return). We can register you as self-employed to HMRC on your behalf! Fill out this form and let us handle everything! After registering, every year, you will be required to complete a tax return. You will enter your self-employment earnings as well as any allowable expenditure incurred details in the tax return. This will permit HMRC to calculate the amount of your income tax and NI you must pay. If you have file your tax return you must pay the tax amount at the end of the tax year. Am I Exempt from PAYE If I’m Self-Employed You are exempt from PAYE if the following case applies to you: You are doing business for yourself and are liable for its success and failure and you can make a profit or a loss of your business. You can control what work you do, when, how, and where you do it. You can outsource the work to anybody else. Your employer agrees to a fixed commission for your work. You utilise your amount of money to purchase business things, cover operating expenses, and provide equipment and tools for your own work or the work of the employees you hire. In case you are a self-employed person, you must fill self-assessment tax return form once every year. Also, you have to pay HM Revenue & Customs twice a year ( in January and July). In some cases, you can pay just via PAYE. It means that your taxes will be automatically paid through it and there will be no risk of not meeting a deadline. To use PAYE, You must submit your tax return by October, 31st (manually). You can also submit it online by December, 30th. HM Revenue & Customs will collect the money automatically you owe via PAYE, in case you meet the conditions mentioned above; otherwise, pay through instalments. Unable to calculate your employed and self-employed tax? Let us handle this! What is a Self-Assessment Tax Return? If you are self-employed and do not pay income tax through Pay As You Earn, you must register for Self-Assessment. After the end of a tax year (5 April), self-employed businesses and individuals must file a Self-Assessment tax return to record their earnings. To fill out and submit your returns, you only need to keep track of your receipts and bank statements. HM Revenue & Customs will assess what you have to pay on the information you’ve provided. By the 31st of January, you have to pay your Self-Assessment bill. In addition, the amount of tax you are required to pay is based on your income tax band. You have to send a self-assessment tax return in case: You’re self-employed with a profit of over £1,000 You are a partner in a partnership Remember that submitting your tax return up to three months late will result in a £100 penalty. You will pay more if it is late for more than three months. Final Thoughts To summarise the discussion, we can say that you can be self-employed and employed at the same time, which has many simple but valuable advantages. However, you should be aware, that there are tax implications with this. PAYE is a system that deducts income tax and NICs from employees. But as a self-employed, you must pay tax and NI through Self-Assessment. Turn to us if you need any help with accounting, tax payroll, and other finance-related problems! We will solve you are all …

How to Register as Sole Trader?

George06/08/2021Business , Finance , self-employed accountant , Sole Proprietorship , Sole Trader

Establishing your own business is the best way to be your own boss, have control over your work-life balance, and enjoy flexible working hours. And the most basic type of business structure is the sole proprietorship. Due to the freedom and work choice, there are around 3.5 million sole traders in the UK that makeup 59% of the UK private sector business population. So, if you also want to be the one, you need to know how to register as sole trader. Continue reading this post to learn more! Ways to Register as a Sole Trader? To start your business, you are required to register it with HMRC first. You can do it by: Applying online and filling out the online form via the self-registration form. Sending the registration form via post to HMRC. Contacting HMRC on 0300 200 3310. Our qualified accountants at CruseBurke will assist you to manage your finances effectively. Feel free to get in touch with us! Information HMRC Needs for Registration HMRC needs the following information to register your business (sole proprietorship): Name DOB Postal address Telephone number National Insurance number Business name Nature of the work Starting date of the business If you lack an NI number, you can contact Jobcentre Plus to get one. On the other hand, if you have it but can’t find it, you can go online and fill in CA5403 to get your NI number. In addition, you also need to know that your business name should not include Ltd, LLP or plc. It should not contain sensitive words and expressions, it should not seem offensive and it needs to be a unique trademark. When Should I Register? The sooner you register, the better. However, you need to register before 5th October for your business’s second-year tax. If you register late, you don’t need to pay a penalty if you are sending your Self Assessment tax return and paying your tax bills on time. Keep in mind that a tax year starts from 6 April to 5 April the next year. How Can I Register for Self Assessment? As a self-employed person, you need to register for the Self-Assessment. You need to do so by 5th October of the second year of your business, otherwise, you might face a penalty. Normally, the registration process takes around 10 working days for people living in the UK. If you’re abroad, it might take around 21 days. Efficient record management is the best way to keep your finances in order. Therefore you must need the help of an accountant in this regard. Contact us today! What’s Going to Happen Next? A Unique Taxpayer Reference number (UTR) will be provided to you after your business has been registered. Then, you’ll get an activation code for activating your Government Gateway Online Account. You will also get access to the Self Assessment service via your online account which will show your tax status. Legal Responsibilities Once you’re registered, you can start trading! But you need to know that there are a few responsibilities that you need to follow as a sole trader. These include: Registering for Self Assessment Choosing a business name Keeping financial records Sending annual tax returns Paying taxes Following the VAT rules of HMRC Quick Wrap Up To sum up, you are now well aware of how to register as a sole trader, what information you need to provide, how can you register for self-assessment and what are your legal responsibilities as a sole trader. Although setting up a sole proprietorship is easy, however, managing its finances can be complex, particularly sending tax returns after each tax year. Therefore, look no further other than CruseBurke. We offer comprehensive accounting and taxation services to Sole Traders for only £25 per month. You may create your own unique package here. Get an instant quote right now! Disclaimer: This blog is written for general information on how to register as a sole trader.

What is a Sole Proprietorship? Responsibilities of a Sole Trader

George30/07/2021Business , Sole Proprietorship , Sole Trader

If you are fed up with working under someone else and want to be your own boss, you should turn to a sole proprietorship. Although there are different kinds of business structures to choose from but sole proprietorship is the one that needs less hassle and paperwork to establish. So, in this post, we’re going to explore what is a sole proprietorship and what are the responsibilities of the sole trader. A sole proprietorship is a basic business structure where you get work freedom and you have total control over your business affairs. Here you are totally responsible for the success and failure of the business. Though the downside of this structure is you and your business are taken as a single entity where you’re liable for all the business debt. However, here you keep all your income/profit yourself. We’re providing complete accounting and taxation package for Sole Traders only at £25 a month and you can make your own custom package here. Get an instant quote right now! What is a Sole Proprietorship? It is the simplest form of business structure where, usually, the business is owned and operated by a single individual. Here the owner and business are considered the same. A sole proprietorship is straightforward to establish as there are no legal formalities and a lot of administration involved to run a business. What Defines a Sole Trader? If your earning is over £1,000 as a self-employed worker in a tax year, you can register your business as a sole trader with HMRC. For this reason, you can pay Class 2 NICs voluntarily to get access to government benefits. To establish your business as a sole trader, you don’t need to register at Companies House and there is not resignation fee. In addition, you don’t need to have directors, shareholders or partners to handle. As you are yourself the director or owner of your business. But as a sole trader, you need to follow regulations and meet your liabilities. Sole tradership is not only concerned with trade, it also includes plumbers, electricians, builders, plumbers and so on. Almost all kinds of freelancers come under the category of a sole proprietorship. Responsibilities of a Sole Trader Sole traders have a number of legal responsibilities that you need to follow. These include: 1) Choosing a Business Name As a sole trader, you must choose a business name that is unique and different from others. You also need to use this name on your paperwork like invoices, etc. You can’t put Ltd with your business name. Furthermore, you don’t need to use sensitive works for your business. 2) Register your Business with HMRC Though you don’t need to register your business at Companies House, however, you need to register it with HMRC. As you need to pay your income tax through a self-assessment system. By doing it, you can send your annual self-assessment tax return to HMRC to informal your business earnings and expenses and calculate your tax accordingly. Alongside, you can also pay your Class 2 NIC through the tax return. You can register your business with HMRC through the help of these three ways: Fill out an online form via HMRC print off the form and fill it in, and send it to the address on the form telephone HMRC on 0300 200 3310. 3) Keep Accurate Records You need to keep business records as evidence for your business. As HMRC may require the details of your business sales, income, expenses, etc. It also includes bank receipts, invoices, bank statements, cheques, and slips. In addition, you also need to have PAYE records if you have employees and VAT records if you are a VAT registered business. Managing records and keeping track of everything can be daunting and time-consuming. Therefore, you need to talk to our accountants to sort out everything. Quick Sum Up So, you have got enough information on what is a sole proprietorship and what are the responsibilities of the sole trader. A lot of business owners might feel it difficult to manage everything while running their business. For this reason, we are there to make everything easy for you. Whether it’s record-keeping, financial management, tax return or dealing with HMRC, we can do all for you at an affordable rate. So that you can focus more on your business for its success. Therefore, look no further other than CruseBurke. We have a team of expert bookkeepers and accountants for your assistance. Don’t hesitate to get in touch with us. Get an instant quote right away! Disclaimer: This blog provides basic information on sole proprietorship.