Does a Sole Trader HAVE to Hire an Accountant? Accountant For Sole Trader
Hiring an accountant for sole trader is an expense, and you may be trying to minimise those. It’s therefore natural to wonder if, as a self-employed person, you HAVE to hire an accountant at all.
When you’re a sole trader, you’ll be responsible for a lot of things. You, for example, will be responsible for finding jobs and interacting with clients directly. It will also be your obligation to file tax returns, which you will have to do every year.
You will, in particular, need to manage your own business accounts, just like any other enterprise. This is not as simple as it may appear, and it is one of the primary reasons why many sole traders like to engage an accountant.
Is it, nevertheless, necessary for sole traders to hire an accountant? No, that is not the case. There is no regulatory requirement that self-employed individuals have an accountant on their payroll. This is a choice you can make yourself. But there are plenty of good reasons why it’s something you should give serious consideration.
Reasons to choose a sole trader accountant
Starting a business as a sole trader is relatively simple and a straight forward process, with very little initial costinvolved. The yearly accounts can be prepared by the sole trader and can be used as a basis for the completion of the self-assessment tax return.
The business is run completely by the individual and all the profit is retained by the sole trader, without having to consider anyone else. However, there are risks attached to running a business as a sole trader, as debts are the responsibility of the company owner and could result in the loss of personal assets.
Benefits of a sole trader accountant
You can be sure that a qualified individual will be preparing your accounts and completing your self-assessment tax
return. This means that all allowable expenses and tax reliefs will be claimed, along with legitimate expenditure, including the cost of your accountant. The cost of a reputable accountant is typically outweighed by the expenses, allowances and reliefs which are claimed, reducing the tax bill.
An experienced accountant will prepare accounts and complete the tax return accurately, meaning that your tax calculation will be based on actual figures and the tax bill is correct. Preparing accounts, yourself may result in errors, which could lead to paying either too much or not enough tax, incurring a penalty charge.
Tax returns have to be completed accurately and include all income and claims for expenses, allowances and tax reliefs. If a tax return compliance check is conducted by HMRC, errors may be found and a penalty will be charged.
Saving valuable resources
Running a business as a sole trader is time consuming and funds may be scarce. A sole trader accountant will be able to advise when it will be beneficial to incorporate as a limited company and maximise income. The preparation of accounts and the completion of a self-assessment tax return is timely, which is why outsourcing to an accountant is recommended.
Running a business as a sole trader is time consuming and funds may be scarce. A sole trader accountant will be able to advise when it will be beneficial to incorporate as a limited company and maximise income. The preparation of accounts and the completion of a self-assessment tax return is timely, which is why outsourcing to an accountant is recommended.
A sole trader accountant will often charge you less to prepare your accounts and tax return than they would charge a limited company; this is because a sole trader requires far less input than a limited company, and is therefore cheaper.
A reputable sole trader accountant will be able to save money for your business, leaving you free to concentrate on other aspects of the company, like finding new contracts.
You can get further details on our sole trader accounting services
