Bookkeeping and Tax Service Tips for Sole Traders

A sole trader is someone who is self-employed and only works by themselves. They don’t have a large company or employees of their own. You’ll have your own business and will handle everything yourself. However, you will want to consider hiring someone for your bookkeeping and tax service needs.

Every year, you’ll need to fill out your personal tax return. That means getting your business account in order and separating your personal and business expenses. How do you do that? Here are the top taxing and bookkeeping tips for sole traders.

Open a Business Account

While you may be a sole trader, you’ll still want to consider a separate bank account for your business. This helps to keep your personal and business income separate and will avoid mixing up or explaining expenses if you’re audited.

You don’t necessarily need a “business” account. You could opt for a normal checking account that is used for only business purposes. Just make sure that everything for business is kept separate from your personal expenses.

Keep Every Single Receipt in Order

One of the biggest bookkeeping and tax service tips is to make sure all your receipts are in order. You should keep every single receipt for your business purchases. You’ll need them to prove the cost when it comes to claiming things back.

There are times you’ll make payments online. If this doesn’t come with a receipt, you’ll need the confirmation emails and your bank/credit card statements.

One of the best things you can do is store everything in a physical folder. You’ll need to keep receipts for up to six years, so you’ll want a folder for every single year. You can also scan the receipts into your computer to save them in a designated folder. Just keep a backup of your digital files!

Know If You Need to Collect Taxes

In some cases, you’ll need to collect sales tax from your clients or your customers. This is something you need to check up on before you start your business. If you don’t collect the taxes, you could find yourself in deep legal trouble with the IRS and that’s the last thing you want!

A good bookkeeping or tax service will know about your state rules. It will also know about the requirements when getting clients outside of the country or if you outsource your work to others and your own sales tax payments.

Hire an Accountant for Bookkeeping and Tax Service Needs
Quite honestly, getting an accountant could be the best thing you ever do for your business. You’ll get rid of all the financial headache, giving the job to someone who already knows your needs, your requirements, and your payments.

You’ll even find you save money in the future. A good accountant will work out your tax deductions and advice you on purchases to save money in the long-term. It’s time to make this serious decision.

Get your financial needs in order for your individual business. A sole trader will still be liable to pay tax like any other business, and the bookkeeping and tax service tips above are just a start.