First, you should understand what a sole
trader is and know the difference between self-employed. A sole trader is
actually known as a sole trader, however, self-employed refers that someone
does not employ you. There are a number of people who are self-employed, keep
on their business, and follow a sole trader structure.
Here’re some names that are used in sole
trade structure, for example, electricians, plumbers, freelance writers,
personal tutors, etc.
Understand
the legal duties and accountabilities of a sole trader
Having your business and playing the role
of a sole trader is an easy option for a new start-up however there are some
legal duties where accountants in Peterborough
come into the role.
The
need for filing a self-assessment tax return
If you are a sole trade then it is
required to file a self-assessment tax return at the end of the year. Pay the
bill till the 31st January of your next year and tax is counted on
the profit you have generated. Filing requires receipts of sales expenses along
with other records.
Required
to make National insurance contribution
When you are a sole trader, you must have
to make two national insurance contributions like class 2 and class 4.
Class 4 national insurance is counted on
its own once a year is included in your tax automatically at the time when you
pay the self-assessment tax return.
Class 2 national insurance is known as
the flat-rate contribution and is collected every week. Though it is a small
amount, however, it is necessary to register for class 2 or you might be asked
to pay for it in lump-sum on a decided date.
Register
for VAT
It is an option for those who have a
turnover of up to £85,000, in case, you cross this number then it is required
to take VAT registration.
When you are done with its registration,
then you’ll need to connect with accountants in Peterborough so that you can complete the VAT
returns and accounts remain updated. You have an option to register online and
this way you’ll get the VAT number and online VAT account will open to file
your returns.
Need
assistance to work as a sole trader?
Various factors you need to take into
consideration before you proceed to become a sole trader. Various people start
as a sole trader and later they register themselves as a limited company. The
decision is good, however, it is ideal to connect with an accountant who can
guide you. Accountants in Peterborough can
assist in you what being a sole trader refers to and you would know the right
structure for your business.
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