KN Morris Tax Consultancy can provide assistance if you are already a sole trader or planning to start your own business in London. As a comprehensive provider of accounting services and tax advice for independent businesses and self-employed professionals, we offer a one-stop-shop solution.
Establishing Yourself as a Sole Trader
Setting up as a sole trader is a suitable option if you are self-employed or intend to be in the near future. According to the UK Government, approximately 76% of small businesses in the country are sole traders. In this case, you would be personally responsible for any financial risks that come with running the business, as it is not a separate legal entity. This differs from limited companies, where business owners have limited liability.
As a business owner in London, deciding whether to set up as a limited company is a crucial decision. There are various distinctions between being a sole trader and a limited company, including tax advantages when switching from the former to the latter. For further guidance on limited companies, please refer to our resources.
REGISTRATION OF BUSINESS NAME FOR SOLE TRADERS IN LONDON
When it comes to registering your business name, as a sole trader in London, you have the flexibility to operate under your own name or to choose a business name. However, it is important to note that you cannot use certain terms such as Public Limited Company (PLC), Limited (Ltd), or Limited Liability Partnership (LLP) as they imply a different business status. As a sole trader, it is important to accurately represent your business and avoid false portrayal of your self-employment. At KN Morris Tax Consultancy, we can guide you through the process of registering your business name and ensure that you comply with all the necessary regulations.
TAX OBLIGATIONS FOR SOLE TRADERS
As a sole trader, you are responsible for paying income tax and National Insurance contributions through the self-assessment system. At KN Morris Tax Consultancy, we can assist you with registering for self-assessment with HMRC.
It is crucial to keep in mind the important tax deadlines for sole traders, which are as follows:
31st January - Deadline for submitting the tax return for the previous year, payment of balance of tax due for the previous year, and the first payment on account for the current tax year.
31st July - Deadline for payment of the second payment on account for the current tax year.
It is crucial to consider the impact of these payments on cash flow. In the first year of trading as a sole trader, you may be required to pay 150% of your tax for the first year by the following 31st January, and an additional 50% by the following 31st July.
To ensure that your tax obligations are met accurately and on time, it is essential to maintain accurate records of your sales and expenses. At KN Morris Tax Consultancy, our bookkeeping services can assist you with this task, allowing you to concentrate on expanding your business.
VAT Registration for Sole Traders in London
If you expect to earn £85,000 or more per year from your sole trader business, it is mandatory to register for Value Added Tax (VAT) with HMRC. Once registered, you will need to charge VAT on all qualifying sales and pay this directly to HMRC when submitting your VAT returns.
Being VAT-registered can offer several advantages, including the ability to claim back VAT on eligible business-related goods or services. At KN Morris Tax Consultancy, we can guide you through the process of VAT registration and help ensure that your VAT returns are accurate and timely.
Special Considerations for Sole Traders in London
As a sole trader, it's important to consider any specialist licences or permissions you may need to operate your business legally. For instance, if you're a self-employed taxi driver, you will need to have either a Hackney Carriage licence or a Private Hire Vehicle (PHV) licence.
Additionally, if you plan on selling goods as a street trader, you will need to obtain a licence from your local council. Similarly, if you're starting a catering business, your premises will need to be inspected and approved for selling food to the public. Finally, it may also be necessary to consider sole trader insurance to protect your business. At KN Morris Tax Consultancy, we can provide guidance on all these considerations and help you operate your business successfully.
Assisting with Sole Trader Registration
At KN Morris Tax Consultancy, we can assist you in registering as a sole trader promptly and competently, allowing you to focus on launching and managing your enterprise. Our agent account will be utilised to complete the registration process after gathering fundamental details from you.
Can You Be A Sole Trader & Be Employed at the Same Time?
If you plan to operate a self-employed business alongside your regular employment, it is important to review your employment agreement to ensure that it permits such arrangements. It is also important to note that you will be responsible for declaring and paying taxes and National Insurance on your self-employed income through self-assessment tax returns. You must declare any employed income in your annual self-assessment using P60/P11d forms, as well as any other income for the relevant tax year. At KN Morris Tax Consultancy, we can provide guidance on managing your tax obligations as a self-employed individual with additional employment income.
Additional Support for Sole Traders from KN Morris Tax Consultancy
KN Morris Tax Consultancy offers a variety of beneficial services for sole traders who are seeking to expand their business. Our affordable digital expense scanning plans, powered by the Dext platform, formerly known as Receipt Bank, allow you to capture and send receipts directly to us for bookkeeping purposes.
We can also assist you in preparing regular management accounts and annual year-end accounts at competitive rates, which can help you to better understand the performance of your business. Formal year-end accounts may also be necessary for sole traders who are applying for mortgages or seeking finance from high-street banks and lenders.
