Sole Trader Accounting

You’re self-employed if you run your own business, hire people, provide the equipment you need to work, charge for your services and sell goods or services for profit. A sole trader or self-employed person is not a limited company. If you’re unsure or need further information, please consult the HMRC website.

What records do you need to keep?

When you are self-employed, you are responsible for notifying HMRC of your earnings and paying all appropriate taxes. In order to do this correctly, you must keep records of:

• Your invoices.
• Your expenses.
• Your profit.

You must fill out regular tax returns – or have your accountant file it for you.

What can you claim as expenses?

There are many costs associated with running your own business. If you have purchased certain items or services in conjunction with the day to day running of your business, you will be able to offset these against your turnover – meaning you do not have to pay tax on that amount. (i.e If you have spent £10,000 on expenses, and your turnover is £40,000 – you will only pay tax on £30,000).

Expenses include:

• Travel costs such as parking, public transport fares and fuel.
• Accountancy fees.
• Office equipment such as stationary and business phone costs.
• Protective or branded clothing.
• Staff and financial costs.
• Advertising costs.
• Business rates and utilities.
• Capital Costs for machinery, vehicles, office equipment.

Plus other specific expenditures.