Sole Trader / Subcontractor

If you pay PAYE which is Tax and you pay National Insurance on your wages then you are employed. This is deducted on your payslip by your employer and you have nothing to do in the way of accounts.

However, if your self-employed then you’re either a sub-contractor or a sole trader

You are a sub-contractor if you work for someone as self-employed and not employed. You send an invoice for work done and receive 100% with nothing deducted.

They may deduct tax from you at 20% (in the construction industry) and you claim it back at the end of the year in your tax return which we can do for you.

This is called CIS (see CIS section) – we specialise in this for you

If you are trading as yourself (and are not a ltd company) such as a florist, café or beauty salon etc then you are a sole trader. You may just have one or two main customers or many. It is your own business but you are responsible for all debts.

You have to create an account on the Government Gateway website. (we can do this for you)

We need your name, address, National Insurance number, name of business and business address.

This will register you for self-assessment which means that you have to submit a tax return each year (which we do for you). You get sent a UTR (Unique tax Reference) code by HMRC and give this to us so that we can then use it so that we can officially act for you as an agent.

Each year you must send a self-assessment tax return to HMRC. (we do this for you). The tax return includes all your income and expenses and tax deducted (if CIS) during the year.

It is only then that you are deducted tax and NI calculated on your profit.

But if during the year you have been deducted CIS at 20% then this will be refunded depending on how much profit you’ve made during the year.

All depends on your profit.

You pay Income Tax and National Insurance

INCOME TAX
You have a personal allowance from the government which entitles you to make a profit in 2020-21 of £12500 before you pay any tax.

Anything over £12500 and you pay 20% Tax (and between £50,001-£150,000 then 40%)

NATIONAL INSURANCE
CLASS 2: If you have taxable income in 2020-21 of over £6240 then you have to pay Class 2 at £3.05 per wk. but only on the weeks you have worked.
CLASS 4: If you have taxable income in 2020-21 of between £9500-£50,000 then the difference is charged at 9%

All depends on your profit.

For sole traders it depends on the business and amount of work involved. You may have a café with daily till receipts and employ staff who need to be on payroll.

Our prices start at £300 vat but whatever we agree it will include all costs including accounts produced, self-assessments submitted and payroll.

You can register voluntarily but if your income is above £85,000 for 2020-21 then you must be VAT registered.

You then charge VAT on your sales and reclaim any VAT paid on purchases.

VAT returns are done every 3 months and submission and payment to HMRC is due 1 month and 7 days afterwards

Eg. If your VAT return is for the period 01 MAY TO 31 JUL then submission and payment to HMRC must be done by 7th SEP

We do all this on Quickbooks for you and submit your VAT returns to HMRC.