Self-assessment forms are not the most interesting part of owning your own business; however, they are a must when assessing the amount of tax owed. The forms also ensure that you are not paying too much tax and can calculate whether a business owner is owed a rebate. Tax can be confusing at the best of times, and for sole traders it can seem like a minefield. Below are some basic tips and advice that sole traders should consider.
As a sole trader you need to keep a record of all sales through your business; in addition, a sole trader needs to keep a record of all personal income and expenditure, as the business is purely their responsibility.
If you have any employees as a sole trader, you need to ensure you keep track of any PAYE information. This includes:
– The annual leave taken by your employees.
– The sickness days, regardless of whether you pay sickness.
– The expenses and benefits you give to your employees.
– All documents relating to pay.
– Employee wages.
– Employee reductions made through their wages.
Keep all paperwork
Many sole traders will work digitally; however, you should still retain any paperwork you receive with regard to your employees and any business payments you make or receive. The government has every right to ask for proof of transactions, including:
– Receipts for any purchases.
– Bank statements.
– Bank slips and/or cheque stubs.
The easiest way to ensure proficient accountancy is to keep monthly files, as this makes your self-assessment forms easier to fill out. You can also use the services of a professional bookkeeping service, such as https://www.kngbusinesssupport.co.uk/bookkeeping-services-gloucestershire/.
The type of accounting you are using will depend on the information required by the taxman. Bookkeeping services in Gloucestershire and nationwide will offer the following accounting systems:
Every transaction needs to be reported for the whole financial year. This is not dependant on whether the transactions have been completed.
Cash basis accounting
This system is at times preferred by sole traders, as it ensures that only the completed income and expenses from the financial year in question are recorded. Any transactions not completed in the tax year being reported will fall into the following year.