Sole Traders Missing Out on Tax Savings
More than half of sole traders could be missing out on tax savings by not turning to professional accountants for help with their bookkeeping.
Research by local professional advice website Unbiased.co.uk found that 54% of ‘one-man bands’ were doing their own accounts. One in five micro-businesses, with 1-9 employees, were also taking a DIY approach to their books, the online survey of 365 businesses found.
But these firms could well be missing out on tax savings by not claiming everything they are entitled to, said Elaine Clark of Cheap Accounting:
“The main problem for sole traders doing their self-assessment is making sure you claim for what you should be claiming for and you aren’t claiming for what you shouldn’t. Where do you claim travel expenses from? Can you just put a block amount? No. You also need to make sure you declare all sources of income.”
The survey also found that accountants were the first port of call for small businesses seeking any kind of financial advice. However, there was a big gap between micro-businesses (69%) and sole traders (36%) prepared to turn to a professional provider for help.
Unbiased.co.uk chief executive, Karen Barrett, said it was “alarming” that so many sole traders and micro-businesses were going it alone:
“There are many small businesses struggling to make ends meet in the current environment and ensuring that they have the right financial guidance could make all the difference.”
Clark agreed, saying:
“If you’re taking on employees, speak to an accountant. If you want to get on the VAT register, speak to an accountant.”
“Unless you’ve got the most simple income stream and costs, I would say consult an accountant. And if you are a limited company, I fail to see how you can do your own accounts.”
For sole traders who did want to handle their own accounts, Clark recommended using a simple cloud accounting package geared specifically to their needs.
“I would say Sage One is a good package to look at. It’s inexpensive because you’re only paying for the functionality you actually use.”