PREPARATION OF SOLD TRADERS ANNUAL ACCOUNTS
- Normally, as a sole trader you need to prepare your annual accounts in order to prepare your self assessment tax return and maybe to secure external finance.
- Thus as it is a process you do not want, we will try to make it as easy as possible for you by having one meeting to discuss both the accounts and your tax return.
- Regarding the layout of your annual accounts, as they are your accounts within reason we can formal those to show the information you require to manage your business.
- If you do not need a special format we suggest that you use the same headings as on the tax return pages or continue to use the ones you use now.
- In addition to preparing your accounts you also need to prepare a tax computation which effectively converts your Accounts prepared under accounting standards to the tax rules. Some of the adjustments are as follows:
- Depreciation – Businesses set their own rates of depreciation depending upon the expected life of that type of asset that is computers – expected life expectance is short therefore high depreciation rate. However HMRC will only allow specific percentages, in tax speak these allowances are called Capital allowances of which there is various types.
- Entertaining – for tax purposes these costs are disallowed, how from an accounts view point it is important that these costs are incorporated into your accounts.
- Private usage – as a sole trader or Partner it is likely that you will need a car to use in the business. Therefore as that vehicle will have a non business element it is important that the costs of running the car are kept separate from other travelling expenses. Then an adjustment can be made on the tax computation for the private use.
- Contact us; we will prepare your annual accounts in a timely manner ready for your self assessment tax return.