A sole trader accountant offers accounting services to self-employed people who need financial support, either in person or through online accounting. We at Pearl Lemon Accountants offer these services.
Accounting for sole traders focuses mostly on avoiding debt and maximizing profits.
Our sole trading accountancy team is experienced and thorough, and we can meet all of your sole trading accountancy needs at Pearl Lemon Accountants. Find out how accounting professionals can improve your sole trading business and boost your profit margins.
Establishing a Sole Tradership
To many people, the first and foremost advantage of this way of setting up is that it is very easy. As a sole trader, you must ensure that you register with HMRC at the end of every year and complete a self-assessment tax return.
As a self-employed person, you have few legal requirements to worry about and are completely independent from the demands of the workforce, you only have to make sure your income taxes are paid on time.
As a sole trader, your profit from the business is typically taken out by yourself, and this is commonly referred to as ‘drawings,’ that is, you take these drawings out of the business, and that is how you make your money. The owner can simply reinvest the money instead of taking it. Business profits are liable for income tax, regardless of whether they are withdrawn.
How Does Being a Sole Trader Affect Your Business?
As accounting service providers for many years, we have typically found that many sole traders must consider becoming a limited company due to some of the main disadvantages.
As a Sole Trader, you are personally responsible for the entire business. In other words, if the business you operate owes money and you cannot pay it, there is no protection from having your assets seized to satisfy the debt.
A second disadvantage of sole traders is that they are limited in terms of capital investment. There is only one owner of the company, so investors cannot buy stock.
Depending on how you look at it, sole traders have the advantage or disadvantage of having only a profit and loss statement by law. It is quite common for sole traders to produce profit and loss statements and balance sheets, yet usually only the profit and loss statement is necessary.
Keeping track of your business’s finances can be difficult if you do not have a balance sheet, which is where you can benefit from hiring an accountant, whether through in-person or online accounting.
What’s the Difference Between a Sole Trader and a Self-Employed Person?
Neither sole traders nor self-employed are described differently in terminology. Their business profiles are identical. Whenever a business owner is referred to as a sole trader, it means the same thing as if they are self-employed. The distinction is merely one of semantics.
Is it Beneficial to Use a Sole Trader Accounting Service?
Accounting services are an important benefit for sole traders because they allow business owners to concentrate on other parts of their business such as marketing, product development, and acquisitions.
New businesses would do well to hire one of our accountants and use our accounting software. Our insights and our advice are often essential if you are new to business and want to have a fighting chance of succeeding.
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