Sole Trader Accountants Manchester
Welcome to Quay Accountants for Sole Traders in Manchester and beyond
Our chartered accountants have expert knowledge of sole trader accounting, and can not only file your taxes for you, but can guide you in making important future business decisions.
What is a sole trader/self-employed?
A sole trader is someone who is self-employed and runs their own business. Unlike limited companies, there’s no legal distinction between the owner and your business, so if your business ran into any debts or legal action, you would be personally liable.
What are the key features of a sole trader?
- Sole traders are owned by one person
- They are usually small in size
- They have unlimited liability - as a sole trader, you'll be personally responsible for the business's debts so personal assets such as your house or car could be at risk
- Setting up as a sole trader is simple
- Less legal obligations than limited companies
- Very little paperwork/admin
- Harder to raise finance compared to a limited company
- More privacy - unlike limited companies whose accounts and details about directors are available to the public on the Companies House website, your financial records and company information aren't available to view
What tax does a sole trader pay?
As a sole trader, you pay income tax and national insurance contributions (NICs) on the profits that your business makes. Your profit is the income your business receives, minus allowable business expenses.
Every tax year, your profits are reported to HMRC through a Self Assessment Tax Return, which needs to be filed, along with the associated tax due to HMRC by the 31st January every year.
If your Self Assessment tax bill is more than £1,000, you’ll have to pay a Payment on Account due on 31st July each year.
At present, if your business’s turnover exceeds £85,000 in a 12 month rolling period, then you must register for VAT with HMRC. This applies to both Sole Traders and Limited Companies.
As a VAT registered sole trader, you would need to charge VAT to your customers, but you would also be able to reclaim any VAT that you had paid on eligible business expenses. You’ll need to prepare, submit and pay quarterly VAT returns to HMRC.
At Quay Accounting our dedicated accountants can help with your VAT registration and assist with your tax returns, leaving you free to focus on what you do best…running your business.
What chartered accounting services do Quay Accountants offer for sole traders?
Although being a sole trader is one of the simplest ways to get started in business, there are many processes that need to be followed.
At Quay Accountants, we offer several accountancy solutions to take away the headache of being a sole trader and give you complete peace of mind:
- Registering you as a sole trader business with HMRC
- Sole Trader Accounts
- Bookkeeping
- VAT returns
- Payroll
- Regular tax efficiency reviews
Looking for a local Manchester accountant?
Quay Accountants are a local firm of Chartered Certified Accountants based in Stretford, Greater Manchester.
We service clients from all around the country, as we specialise in online accountancy services. However, our clients that are local to us can meet face-to-face with their accountant in our offices.
Our office is located at:
Trafford House, Chester Road, Stretford, M32 0RS.
Contact Us
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What else is included in our Manchester accountancy packages?
- Dedicated and enthusiastic team
- Experienced and knowledgeable team with previous experience in top 20 accounting firms
- Industry knowledge
- Dedicated accountant who actually cares about your business
- Fixed monthly fee’s agreed in advance – no unexpected bills
We provide the complete accountancy service throughout Manchester for individuals and small businesses looking for chartered accountants who need help assisting their business thrive.
Why choose Quay Accountants for your sole trader accounting?
At Quay Accountants, our sole trader accounting services take the headache away from being self-employed. We keep on top of everything for you, make sure you never miss a deadline and advice you of any potential tax savings you can make. To find out more and for a free consultation, contact Quay Accountants today!
What records do sole traders need to keep?
If you are self-employed, you’re legally required to keep a record of the following information for five years:
- Business and personal income
- All business expenses
- Details of any grants received
- VAT records (if you’re VAT registered)
What can I claim for business expenses?
There are many costs associated with running your own business that you can claim as a sole trader.
These costs can be offset against your turnover – meaning the amount you get taxed on is reduced. i.e if your turnover is £30,000 and you have spent £5,000 on expenses – you will only pay tax on the £25,000).
Some examples of expenses you can claim include:
- Accountancy fees
- Advertising costs
- Travel costs
- Uniform
- Costs of goods bought for resale
If you would like to see a full list of what self-employed expenses you can claim, please download our FREE self-employed guide by completing the form below:
Self-Employed Expenses Guide - FREE Download
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Can I change from a sole trader to a limited company?
Typically, when people start out in business they start off as a sole trader.
Once your earnings begin to increase, you may want to consider changing to a limited company to pay less tax and enjoy other benefits such as appearing more attractive to potential clients.
There are many steps to take when changing to a limited company such as notifying HMRC that you are now a director, and setting up your new limited company. Failure to do this properly can result in hefty fines and other issues.
We can take care of all this for you and will be able to advise when this is the right time for your business to change to a limited company.
How do I pay myself as a sole trader?
As a sole trader, you do not pay yourself a salary or a wage in the traditional sense. Instead, you pay yourselves by simply withdrawing cash from the business. This is called taking ‘drawings’ from your business.
We would recommend that you open a separate business bank account for your sole trader business.
What are the accounting requirements for a sole trader?
When you’re self-employed, it is your responsibility to report your earnings and pay all appropriate taxes to HMRC via a self-assessment tax return and our accountancy services can assist you with this.
Do sole traders get audited?
Whilst limited companies and LLP’s are audited if they meet certain criteria, unincorporated sole traders and partnerships are exempt from needing an audit, whatever their size might be.
Is it better to be a sole trader or limited company?
The decision to set up as a sole trader or a limited company depends on your circumstances and what you want to get out of the business.
There are both advantages and disadvantages to being a sole trader or limited company. By far the easiest business structure to set up in the first instance is as a sole trader. It involves fewer legal obligations than limited companies have and there’s less admin and paperwork involved.
The main disadvantage of being a sole trader is that you have unlimited liability, so if anything was to go wrong, you would be personally liable. You may also be at a disadvantage when it comes to not having some of the same tax reliefs as limited companies do, and it is harder to raise finance.
Limited companies are more complicated to set up, and have more costs, admin, and legal obligations than sole traders, but their main advantage is their limited liability and that they can be more tax-efficient to operate.
Below is a summary of the main differences between both business structures:
Sole Trader:
- You can start immediately (there's no need to register with Companies House)
- Less paperwork
- Lower accountancy fees
- More privacy
- Losses can be set off against employment income to reduce tax paid
- All business debts are your debts
- Can be less tax efficient
- Less credibility as assumed to be a 'one-man band'
- Harder to get finance as lenders favour limited companies
Limited Company:
- More tax-efficient
- The company is a separate legal entity
- Company debts belong to the company and not you
- Seen as more credible
- Easier to get finance from lenders
- More complex to set up and run
- Has more admin involved
- Higher accountancy fees
- Less privacy as accounts and details of directors are available to view on Companies House
Why choose Quay Accountants for your sole trader accounting?
At Quay Accountants, our sole trader accounting services take the headache away from being self-employed. We keep on top of everything for you, make sure you never miss a deadline and advice you of any potential tax savings you can make.
To find out more and for a free consultation, contact Quay Accountants today!
