Self employment: Sole Traders and Partnerships
Self-employed people are often highly motivated self-reliant individuals who have a commitment to exercising their skills at the very best of their abilities. They may be in partnership with other self-employed people or they may be sole traders.
For many people self-employment is the fulfillment of a dream for others it is a necessity.
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A sole trader is a type of self employment business that is owned and run by one individual. A partnership is a self employment business owned and run by two or more individuals. Unlike a limited company structure, there is no legal distinction between the owner(s) and their business. This means that there is no limit to the liability of the owner to any business debts.
A sole trader or partnership may do business under their own name(s) or may operate under a trading name.
The main advantage of the sole trader/partnership structure is that it is easy and quick to set up, and in the first few years of a business or with small operations it can offer more flexibility than a limited company structure.
However as a business grows so do the risks resulting from the unlimited liability, and some sole traders and partnerships may benefit from incorporating as a limited company at this point. Both sole traders and partnerships are required to prepare annual accounts for their business activities, and to file self-assessment tax returns with HMRC.
New operations should also register their existence with HMRC within 3 months of commencing trade. At J F Balshaw & Co we can assist with all of these aspects.
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We know from experience that self-employed people are often nervous about dealing with HMRC, and that contacting the relevant department can be complicated and time-consuming.
We can act as your agents and deal with HMRC on a daily basis, taking advantage of the dedicated agents' phone lines which give us direct and immediate access to HMRC advisors, allowing you to spend most of your time doing what you do best.
In addition to dealing with the year end accounts and tax return(s) and liaising with HMRC, we can also provide you with some simple guidelines that will help you keep track of your income and expenditure and simplify your paperwork.
Limited Companies
It is often beneficial, for legal and tax purposes, for even quite modest enterprises to structure themselves as a limited company.
A private limited company is a company in which the liability of the members or shareholders of the company is limited to what they have invested in the company.
Limited companies are managed by one or more directors. In the case of small private limited companies the directors are often also the members of the company. Limited companies are required to file annual accounts with Companies House and to provide personal information concerning both directors and shareholders.
The company’s profits are taxed under the UK corporation tax system. The individual shareholders of the company are taxed as individuals on dividends paid out of company profits in proportion to the number of shares held. Directors are also able to take a salary from the business through operating a PAYE scheme.
We can advise on whether a limited company structure is appropriate for your business, and can provide assistance in the incorporation of a new limited company.
We can also assist in the preparation of cash flow forecasts and profit projections to aid the raising of finance for a new company.
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At J F Balshaws we prepare limited company accounts for submission to Companies House in the required iXRBL format.
We provide assistance with Companies House annual returns, corporation tax computations and submission of corporation tax returns to HMRC
Individual tax affairs
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In addition to self employment tax advice we are also able to assist with individuals who are required to file self-assessment tax returns for other reasons, such as to report property income, investment income and capital gains.
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We are also happy to assist with the completion of the new 30 day reporting requirement on the disposal of investment properties.
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Trusts and estates