HMRC Self Assessment
January Self Assessment Deadline
While few people want to focus on their accounting, especially as a sole trader or self-employed individual, it’s a critical part of operations. This part of bookkeeping for sole traders determines how much you pay HMRC in tax.
The Self Assessment deadline for filing is 31 January.
What is the Self Assessment?
First, have you received an email or mailing from HMRC reminding you to submit a Self Assessment? If you have, you must do one even if you don’t think you meet the requirements outlined on the website.
Self Assessment is a way to determine your taxes as a sole trader. Typically, an employer would manage the paperwork. That means if you have a sole trade business, this is how you would pay your taxes and NI contributions each year.
The Self Assessment deadline is when all of the tax returns from the previous year are due. Self Assessment can be completed online. The payments can be made online, through the mail, with a card, or through your banking institution.
What Do You Need for Self Assessment?
Typically, you need your identifying information and your business books to accurately file Self Assessment. The portal walks you through the necessary paperwork step-by-step, including any figuring.
Responsibilities for Self Assessment
First, you must find the right pages in the Self Assessment to complete online. Fortunately, HMRC makes it straightforward to determine which pages you need, and the section for sole trader businesses is readily visible.
Your next consideration must be accuracy. HMRC uses your answers to calculate how much you owe in tax. Inaccurate entries could leave you paying too much or too little. When you’re paying sole trader tax, that’s not an ideal situation.
Additionally, if you pay too little in tax, fines may be assessed. These are generally a percentage of what is missing, so it can add up quickly. You must also pay the owed tax in these situations,
You can hire an accountant to help you file your Self Assessment and ensure your sole trade business books are in order. Regularly balancing your business books or having a professional bookkeeping service do it can also help.
What Happens If You Miss the Self Assessment Deadline
If you miss the Self Assessment deadline, you automatically accrue fines.
If you have trouble paying everything your Self Assessment says you should for sole trader tax, contacting HMRC to set up a payment arrangement can limit or eliminate the penalties. There are also options to space out your payments.
Need Help Managing Your Self Assessment? Contact Us
Self Assessment can be daunting, especially if it is your first year handling the HMRC’s system for your business.
Our bookkeeping services take the guesswork out of filing and maintaining your records. If you are unsure about any matter involving Self Assessment, then speak to the experts.
Contact Sherlock Accounts today; we would be delighted to help you!
is a self-employed individual who is fully responsible for their own business. Choosing to run your business as a sole trader means that everything is controlled and owned by you. By sharing a legal identity with your business, the law requires you to be personally liable for any debts or losses.
How to Register as a Sole Trader?
As with any type of business, you must register with HM Revenue & Customs, this can be done on the HMRC website. The earliest you can register is when you have earned £1,000 from self-employment. You must register your self-assessment by 5th October in your second tax year and continue to complete one annually.
How to Set up as a Sole Trader?
There are a few steps to take when setting up a business as a Sole Trader. Firstly, be sure to obtain any permits or permissions required from local authorities. Creating a secure business bank account separate from your personal account is highly advisable to ensure you do not misplace or misuse business funds.
Other things you may wish to consider are finding suitable premises to work and employment. If you wish to hire staff, you are in charge of employee contracts, statutory pension entitlements and other employment related matters.
Do I Need an Accountant as a Sole Trader?
The short answer is no. There is no legal requirement to hire an accountant, however they can be a helpful support system. Accountants can help cut down the amount of admin you face allowing you to focus on what you do best; your job. Similarly, licensed bookkeepers are also a useful option for Sole Traders as they can save you time by maintaining your records for you. They can also help by supporting important business decisions which is great for new starters! If you are looking for extra support, our packages offer unlimited access to a team of professionals who can help.
Should I Register as a Sole Trader or a Limited Company?
This is important to consider when setting up your business. You should take some time to consider which will work best for you and your business goals.
Becoming a Sole Trader has many benefits. People often choose to become a Sole Trader for the control they have over their business and its profits. The business model is much more flexible, versatile and simple. The set-up is quick and cheap and allows you much more privacy than in any other business model.
However, as a Sole Trader, you are personally liable for any business debts. This can personally affect you and your assets if creditors cannot be paid.
Limited Companies, although much more time consuming and costly, also have their benefits. Unlike Sole Traders, they are legally separate from their business owners, meaning your personal assets would be protected. They are also more tax efficient as they pay corporation tax rather than income tax. Many businesses who begin as Sole Traders choose to change to a limited company once their profits begin to grow.
Contact Sherlock Accounts for Sole Trader Advice
Whether you’re at the beginning of your business journey, or looking to change the legal entity of your business, our friendly team at Sherlock are here to help. Get in touch today and benefit from our professional advice and support!