This week we are going to make sure all of our blog followers know every step you need to take to meet your accounting and tax obligations.
Being compliant with tax is a vital part of running a business and going self-employed. Contrary to popular belief, filing a tax return doesn’t have to be daunting. If you follow our expert advice filing your tax return will be quick, simple and easy.
Sole traders and tax
For a sole trader tax requirements are relatively simple. The essential taxes you will be paying are income tax; national insurance and (if your sales warrant it) you will have to register for VAT.
Whether the work is part-time or full-time, as soon as you start earning money by selling goods or services you should inform the HMRC. Your income is potentially taxable.
Once you inform your tax office they will send you a self-employment tax return form or give you the option to file your return online. The taxable amount of your income will be based on your profits, with any allowances factored in. For instance, for actors, allowable expenses can include costumes and work-related travel.
Key dates for a sole trader
The tax year ends on the 5th April each year.
· All Paper tax returns must be filed to the HMRC by 31st October
· All online returns and payments must be sent to the HMRC by 31st January the following year.
If your tax liability exceeds £1000 you will have to make an advanced payment for the tax year. This will be based on half the previous year’s payment with a second payment that will be due at a later date.