Submitting Tax Returns Is Pivotal For Sole Traders
What is more, there is no set way to run your business as a sole trader. There are thousands of sole traders in the UK, and business operations vary massively, depending on the service offered. However, one thing that all sole traders must do as part of the working year is submitting their self-assessment tax returns.
If you want to simplify the process of making your self-assessment taxes, strive to keep track of your monthly bills, expenses and invoices. Therefore, when the tax year ends, you can log your income and expenses straight onto HMRC, rather than having to spend hours going through your entire year’s finances.
You will also be required to register for VAT if you earn more than £85,000 from self-employment per year. Granted, it is pretty unlikely that you will have to worry about this in your early years of running your business. Many sole traders will never need to pay VAT on their profits.
Don’t be daunted if the need to file a yearly tax return is putting you off becoming a sole trader. An expert accounting company such as Mazuma can help you keep track of your records and submit your self-assessment taxes accurately and on time. Our sole trader tax return service is tailored to your requirements. And the best thing about it? The service is super affordable for all sole traders—no exceptions!
When Should You Register as a Sole Trader?
Becoming a registered sole trader is not an immediate requirement for self-employed individuals. However, anyone working for themselves should legally become the sole owner of their business by 5th October in their second year of trading.
Even if your self-employment profits fall below the current threshold for paying taxes (£12,571), you will still have to register your business. Sole trader registration requires that you submit your annual taxes, no matter what you earn. The only exception is for sole traders who make less than £1,000 per year. These individuals do not need to be registered, and they are also not required to submit their annual self-assessment taxes.
Registering as a sole trader can be intimidating. If you need assistance, Mazuma’s accounting team is always happy to help. We can manage your monthly bookkeeping and offer free advice along the way. Additionally, we can submit your tax and VAT returns for you to avoid last-minute panicking or late-night spreadsheet organizing.