Practical solutions for sole trader accounting.
Being a sole trader offers you the freedom to run your business your way, but it also comes with specific tax and financial responsibilities.
Proper accounting can help you manage your tax liability effectively, offer insights into your business’s performance, and provide robust data to raise finance.
Our accountancy services aim to ease these burdens, allowing you to focus on running your business.
Setting up as a sole trader.
Choosing to operate as a sole trader is one of the most straightforward business structures available. Unlike a limited company, there’s no separate legal entity, meaning simpler financial and tax management.
However, your personal assets could be at risk if your business faces financial difficulties. Therefore, understanding your obligations and planning accordingly is crucial. As a sole trader, you are required to:
- register with HMRC
- maintain records of your business income and expenses
- file an annual self-assessment tax return.
Tax for sole traders
As a sole trader, any money your business makes is treated as your personal income. That means you’ll need to pay income tax and National Insurance contributions on it when you complete your self-assessment tax return. (HMRC has a handy calculator to help you estimate your bill.)
You’ll be taxed on the income your business receives, minus any allowable business expenses.
You’ll need to complete a self-assessment tax return and pay any tax due by 31 January after the end of the tax year you’re filing for.
Many sole traders pay their self-assessment tax through a system called ‘payments on account’, which helps to spread out the cost of the bill. These are advance payments towards your next tax bill, due on 31 January and 31 July.
If you’re working in the construction industry, you might also have requirements to meet under the construction industry scheme (CIS). We can help with CIS calculations and returns.
How does Making Tax Digital affect sole traders?
You might have heard about Making Tax Digital (MTD) before. This Government initiative requires businesses to keep their records digitally and file returns with HMRC using compatible software.
The first mandatory phase of this, MTD for VAT, now applies to all VAT-registered businesses. But even if you’re not registered for VAT, another stage of the scheme is due to come into effect in the next few years: MTD for income tax self-assessment.
Under the current timeline, this will apply to self-employed people with incomes over £50,000 from April 2026, and those with incomes over £30,000 from April 2027.
The easiest way to comply with the rules is to use accounting software – our online accounting service can help.
Why do sole traders need an accountant?
While the sole trader structure is simpler than others, managing your accounts and taxes without expert advice can be risky. Here’s how our specialised service can assist you.
Bookkeeping and financial tracking
Using our advanced accounting software, we’ll help you stay on top of your bookkeeping obligations and keep track of your business income and expenses.
Tax planning and management
Our accountants help you understand your tax liability, advise you on allowable expenses, and guide you through the self-assessment process.
Financial analysis and advice
We offer in-depth analysis of your business finances, providing actionable insights that support decision-making and future planning.
Our approach — the human touch.
In a world dominated by numbers, we prioritise people; the human touch. Our unique approach sets us apart, creating lasting relationships built on trust, understanding, and mutual respect.
We genuinely care about the well-being and growth of your business, going the extra mile to ensure your financial stability and success. We’re approachable and available, always ready to lend a listening ear and provide expert advice tailored to your specific needs.
Contact us today to start your journey with a trusted accountant for sole traders, committed to your business success.
What to expect
Why choose our accounting services for sole traders?
No two businesses are the same. We offer tailored accountancy services to meet your unique needs.
Our chartered accountants are experienced in handling the unique challenges that sole traders face.
From registering for VAT to annual financial reviews, we provide a comprehensive suite of services to manage all your accountancy needs.
We’re not just about numbers; we genuinely care about your business growth and bring a personal touch to all our services.
Utilise our advanced accounting software to simplify bookkeeping and financial tracking.