Setting up your New Sole Trade Business
First off – Congratulations on becoming a Sole Trader
You have decided to set up your own business and become a Sole Trader. You have decided what you want to do, you have been through lots and lots of options and finally come up with the perfect name. Next up finding a web address, thinking about where to advertise, getting any equipment you need. Well you name it the list of things to do is endless. But what about the official side of things, what do you need to do to make sure that you have everything set up right with HMRC.
Well the below steps will give you a brief introduction into setting up your Sole Trade business.
Register with HMRC
Once you have decided to set up your business you need to register with HMRC by 5 October in your second tax yer to avoid any fines – but the sooner the better
Just go to HMRC to register
Make sure you have your National Insurance Number handy, and if you have your UTR (Unique Tax Reference) you will need that one too. Don’t worry if not, once you register as Self Employed HMRC will issue you with a UTR.
During the set up process you will also have to create an online sign on for HMRC and will be issued with a User ID and will need to create a password. Make a note of your User ID Somewhere safe, and if you can print off/save as a PDF the screen from HMRC with the User ID on it – you will not be able to get again!!
Remember to ask your Accountant if you need any help
Do I need a Bank Account?
It can be very tempting to use your personal account to run your business through. However there are some excellent reasons to set up a business account – and yes there are some out there that are free just take a look around!!
Giving customers a professional service and then providing business accounts details helps with credibility, especially when you are newly trading.
Keeping your business transaction separate from your personal ones makes it a lot easier to keep track of everything. When it comes to doing your accounts everything is in the one place, and makes it easier to make sure you are paying the right amount of tax.
If you are going to apply for any funding for your business you will be expected to have a business bank account.
Keep your Paperwork
Now you are up and running in your business, one of the next things you will find is you have lots of paperwork relating to your business – well to put it simply…
It is always better to have too much than not enough when trying to put together your accounts. Receiving an overflowing shoebox full of paperwork to do your accounts is something I love, rather than having to ask for the elusive receipt from 12 months ago!
If you are unsure if you need something I go by the safe rather than sorry strategy. Remember you paperwork does not need to be physical copies – anything you get by email does not need to be printed – just save in a folder, or however works for you so you can access easily when needed. Lets help to save a few trees at the same time as keeping our bookkeeping all up to date!!
Here at Summ-It Up Accountancy I run a paperless office. Every invoice and receipt that we receive gets scanned as soon as we can and then goes for shredding. This shredding is even used as pet bedding by some of our clients!! So just remember to think before you print – and just save on your computer instead!!
Get an Accountant – Who Works FOR You!
One of the most ignored pieces of advice that new business owners are given is to get an accountant. Yes it may sound like I am just touting for work here but having an accountant can save you time and money, and in the long run be one of the most beneficial decisions you can make.
Look for someone who you feel happy to work with, and make sure they specialise in you size of business. If you are only just starting then you need an accountant who works with small businesses and start ups to support and inform you during this exciting and nerve racking time. It may sound daft, but we can really be of help! Whatever the stage of your business, having someone to turn to for an answer to a question, or just to do your Accounts and Tax Return can make a huge difference.
Start doing your bookkeeping right from the start, on a regular basis (or get someone to do it for you!) If you start as you mean to go on, as your business grows and grows you are able to keep on top of things just by forming a few habits.
Xero is recommended to all clients, be it a hobby business run around a full time job or someone who is running a couple of businesses (Or more!!). Getting this set up in the way that works for you right from the outset means that if you need some help. With a quick look at your figures you if you are thinking of investing in a new machine, or at times when money is a little tight and you cant work out why. Having your bookkeeping up to date means you have see what is going on and your Accountant is able to be of more help to you.