Sole Trader Beginner, Couple of Questions

blue_monkey_2

With regard to your mileage you can claim 40p per mile for petrol and other expenses if using your own car for business (you might need to make sure your car insurance is covered to include business use though incase you have an accident while laden with stock, etc..). Keep a note of what the trip was for an how many miles and use this for your expenses sheet.

In regard to taking money you have paid out yourself then you can do this - it makes no difference if you take out everything you make because the Inland Revenue wil want to know how much your sales were and how much your expenses were, the bank account does not matter.

I would say that is is much easier to get an accounting pacakage that you can use online. I used to do my own accounts for 2 years, you need an understanding of the double entry system - each entry has 2 postings, ie. a bill for expenses would go into the expenses column and come out of the bank account - so unless you have a good deal of knowledge it is worth investing in a bookeeping course otherwise non of it is going to make sense to be honest - and this is more important if you want your business to grow. It will also save hours of your time in the long run.

If you are still doing it yourself you will ideally need to set up 2 cash books and one should be for when you have used your own money on expenses and for when the business owes you money (car expenses for example) and the other for the business money. When you do the expenses each week/month for fuel you should post this into your own 'bank account book' so that you know this money is owed to you, you also need to put into this book when you have taken any money if you want to keep on top of things. Have a look at Sage Accounting - I get mine with my business account with Barclays - it costs me £26 a month plus VAT but I find it much cheaper than if I had bought outright as I get the upgrades for free then but have a think about it and you might find it a worthwhile investment. Likewise, don't forget to declare you are self employed to the Inland Revenue within 3 months else you'll get a fine and also look at finding a business account. not sure what your business is but think about jioning the National Market Traders Federation (https://www.nmtf.co.uk) as you get free product and commercial liability as well as access to other cheap insurances.

Good luck with your business.

Bean_Counter

Hi,

Hopefully the above answered your questions. Whilst it is a long time since I prepared sole trader accounts and tax comps for a living, I thought that I might jot down the following in case it helps.

1. Are you going to use an accountant to do your year end accounts and tax submission?
2. When an accountant, I found it a lot clearer (and hence cheaper in terms of fees) if the client had a separate business bank account. You don't have to, it is just easier, I found.
3. When keeping your accounting records, keep the supporting invoices in a logical order, for eaxample by numbering them and cross referencing with your books. Doesn't take long if you do it as you go and again is easier and cheaper at the end of the year.
4. Your taxable profit will be different from your accounting profit. Various items are allowed or disallowed. Hence there is always time to vary the method of accounting for mileage as it is your first year.
5. Keep a detailed record of your business mileage. Try the free business mileage log template at http://tax.indicator.co.uk/

Let me know if you have any more questions, as this is only a very quick summary of what comes to mind.

jasmin10

Wow what a lot of inof - thank you all again.

I am already registered and have most things in hand. I have begun my accounts book and finding it ok - so far.

I was going to keep the accounts myself and then see how easy it would be to do the self assessment myself as I'm am only working part time and don't think that I would make enough money to warrant an account to do my self assessment, however saying that if I find it impossible I will just hand over my book and let him do it.

Thanks again you have all been fantastic.

Bean_Counter

If you are registered, I presume that you are paying your class 2 national insurance? Probably by quaterly direct debit? Just double check you are registered to avoid the £100 fine if you do not do it within the first three months.

I take your point about only working part time and wanting to do it yourself to avoid the expense of an accountant. I always reckon any decent accountant should be able to save you more tax than the cost of their fee.

I take it you know about when to pay self assessment payments on account?

At least you know where to come if you need further advice.

I have a concern over your initial comment about "sole traders can take money out freely as long as it is accounted for and not leaving the business in deficit". I'll check into this in the morning as I am sure that it counts as taxable income for you.