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Top Five Tips for Sole Traders

Below are our Top Five Tips that you absolutely need to know as a Sole Trader:

  1. Registration - Register your self-employment with HMRC as soon as possible - you do not want to be penalised for late registration!
  2. Bank account - Set up a separate bank account from which ALL of your business-related expenditure will be settled and all business-related income will be received.
  3. Record keeping - Use a bookkeeping software, like QuickBooks, which links to your bank account and allows you to categorise your income and expenditure. This will help you to better understand your business and also enable you to produce helpful reports at the click of a button - a go starting point for us to discuss your business performance periodically. bookkeeping software will also prepare you for Making Tax Digital!
  4. Tax and NI liabilities - Please remember that all the money you work so hard to generate does NOT belong to you! Our trusted friend, the Tax man (HMRC) is due a slice of the cake! We therefore recommend that you put aside approximately 30% of all income generated by your business in preparation for settling your tax and NI liabilities.

    Depending on your income profile, you may be required to make advance payments to HMRC via the Payments on Account system - this would require you to make payments for the following tax year in advance as follows:

    • 50% on 31 January prior to the end of the tax year,
    • 50% on 31 July following the end of the tax year;
    • A balancing payment (difference between the liability per the tax return and the payments made) on 31 January following the end of the tax year

      • Note: The 50% payments are usually based on the Tax and NI liabilities due for the previous tax year.

  5. Build a 'team' -

    Running a business is challenging and time consuming. You need to build a team of experienced and competent specialists who can act as your sounding board. Such a team will help you to navigate the many challenges, pitfalls and problems you will likely face along the way.

    As a minimum, consider finding: