If you’re self-employed and running your own business as an individual, then you should be registered with HMRC as a sole trader. Being a sole trader means there’s no legal distinction between the individual and the business they own.

Sole traders work in many industries and trades, including electricians, plumbers, management consultants, designers, and more. Check out our article on “What is a sole trader?” for more information.

As a sole trader, there’s no law that requires you to have an accountant, but an accountant can help you stay on top of your business finances, manage your legal obligations as a small business owner, and help with your statutory filings and tax returns.

An accountant is especially helpful where your sole trade business is starting out and needs assistance with areas such as VAT, CIS, and employing others.

Tax returns sole traders are required to file include VAT (if your business is VAT registered), and your annual Self Assessment, which covers your personal Income Tax and National Insurance liabilities. You can read more about your tax obligations in our “What is a sole trader?” article.

Sole trader taxes need to be filed with HMRC before their relevant due dates. You’ll need to start by registering as a sole trader with HMRC, and registering for tax returns such as Self Assessment.

As a Crunch client, our team of Chartered Certified accountants can file your tax returns on your behalf. If you don’t have an accountant, though, you’ll need to file your returns yourself.

You can prepare your own sole trader accounts if you’d like, but the best strategy is to get an accountant to do it for you. Accountants can make sure your returns are filed accurately and well ahead of a deadline - all you need to do is sign them off! An accountant will also make sure you are claiming the correct business expenses.

Your annual Self Assessment must be filed with HMRC before 31st January each year.

As a sole trader, all of your business profit is taxable to you personally, and legally there is no difference between you and your business. But unless you want to pay more tax than necessary, you’ll usually want to claim sole trader business expenses when it comes to submitting your annual Self Assessment tax return. You need to be able to prove your business expenses are allowable. Having your business and personal expenses in the same bank account can cause all sorts of headaches and means getting your accounts ready takes longer than necessary.

With secure Open Banking connections, you can link your business bank account directly to your Crunch account and import all of your transactions in one simple click. From there, reconciling your bank accounts becomes a simple job!

Many major banks don’t give you the option to open an account for your small business online, but usually, you’ll be able to start your application on the bank’s website, prior to meeting a representative in person or over the phone.

Some banks will allow you to walk into the branch and make a same-day appointment, but of course, this cannot always be guaranteed.

Crunch is also partnered with a number of trusted banks, including Tide, Metro, Barclays, and Revolut. You can even enjoy special offers and discounts when you open a business account through one of these providers as a Crunch client!

At Crunch, our paid accountancy package for sole traders is available for just £25.50+VAT a month! As a Crunch client, you’ll get access to a team of Chartered Certified accountants and expert client managers, available whenever you need them to help your business thrive.

Sole traders don’t need to register with Companies House, so no information about your business will appear in their records or on their website.

You can claim expenses for your businesses accountancy fees, providing the accountant's time is being spent working on your sole trader accounts and not on personal items, such as the production of your annual Self Assessment.

It’s unlikely your sole trade business will require an audit unless you begin reporting turnover of millions of pounds. In such cases, you’d need an accountant to guide you through any audit requirements.

As a sole trader, you pay yourself based on personal drawings from the business, and you pay Income Tax and National Insurance Contributions based on the profits your business makes.

That’s why it’s important to keep a record of any drawings you take from the business to pay yourself. This helps you to keep on top of your accounts and helps when calculating your profits, which you eventually pay tax on. You’ll also need to put some money aside to pay your personal tax bill when you submit your annual Self Assessment.