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Sole Trader - Why you need to have an accountant
Sole Trader - Why you need to have an accountant

Payroll, accountant, sole trader

Locum PA Team avatar
Written by Locum PA Team
Updated over a week ago

Why you need to have an accountant

Being self-employed means that you pay your taxes via self-assessment rather than via PAYE (taxed at source) and that you pay income tax after invoices for work have been received.

You don’t have to have an accountant to do your books (Invoices and financial transaction records) but it is mandatory to have an accountant do your year end submissions whilst working for us (and the norm for the MDT in the NHS).

There are penalties if you attempt to do this yourselves and make mistakes. HMRC have extensive powers to inspect the records of businesses and the fines and penalties for inaccuracies, late filing and late payments can be very hard-hitting if you fall foul.

First and foremost, a good accountant will make sure that you are 100% compliant (that is, that you do not try to evade tax), but will legally seek to help you reduce the amount of tax you have to pay (legal tax avoidance).

They will make sure that you make full use of any tax reliefs and allowances you are entitled to, and can make sure that you are managing your expenses properly.

Most self-employed sole traders find that they’re quids in after hiring an accountant, and that the fees they pay amount to less than the money they save in tax (not to mention penalties, e.g. for late filing).

The fees paid for a good online accountant can be very manageable financially, will provide peace of mind and should mean you take home more income. Accountancy fees are also fully tax deductible as an expense. Meaning rather that paying (n-tax amount) you are paying to HMRC = (n-tax amount-accountant fees) so the fees are negated.

A self assessment tax return must be submitted by anyone with other income or income not taxed at source by 31st January each year. You need to pay what you owe then; plus pay a sum on account (if applicable) by 31st July.

An accountant will not only complete your tax return accurately, but also calculate your tax liability and file your return online on your behalf, informing you of what you may owe.

Apart from peace of mind that comes with knowing everything is up to scrutiny, the professional analytical eye of an accountant will mean that any anomalies will have been spotted and tax savings will have been suggested. Plus, what you could do to make further savings in future years can be discussed.

Locum PA has made having an accountant mandatory to file end of year returns.

This declaration has always been on our sole trader pay form which workers submit. (See Pay Tab)

We have found that too many of the workers are not doing things correctly themselves (there is no logical reason why you wouldn't have an accountant, so this makes us suspect of 2 things, 1. You don't understand how being a sole trader works, or 2. There is intentiional illegal tax evasion). This also opens up tax liabilities and other issues.

Our contracts for medical services stipulate that no worker due to ir35 is allowed to work as a LTD company. The engagement letter with an accountant ensures this too isn't happening.

HMRC can ask Locum PA what checks we do to prevent Tax evasion, as can our clients.

Locum PA Ltd Requirments

  • To work as a soletrader for Locum PA you must upload proof of engagement with an accountant. This is a letter saying you have agreed that an accountant is acting on your behalf and submitting accounts for you.

    To register for accountant please click here

You also need to have a seperate business account for sole traders.

We use Monzo as our Business account as it seems to have thought of everything

Mettle specifically build for sole traders

Create professional invoices

Use our invoice templates to create, track, and send invoices in seconds so you’re always paid on time

For further information please see our paytab area.

*Please note that if you don't understand anything written here, that's the exact reason you need an accountant. As Locum PA Ltd are not allowed to give financial advice.

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