If your business is a one person show, or still a micro operation, setting up as a sole trader certainly has its advantages. Apart from being comparatively easier to set up than a limited company, sole traders have no obligation to file their accounts. So why do they need sole trader accounting software? There is still a requirement for sole traders to keep a record of all sales and income, as well as business expenses, in case revenue asks to view them.
Sole trader accounting software should be used, not only to keep affairs in order, but also to give you an idea of how your business is performing. Remember, sole traders are not a limited company and therefore you can be personally liable for any debts your business accrues. Using the suite of reporting features provided by sole trader accounting software can reduce your risk of being liable for debts. More positively, the critical information the software provides on your business performance can help you make better business decisions, leading you to success.
As an entrepreneur who sets up as a sole trader, you will be taxed through self assessment, on the entire earnings of the business. This differs to a limited company but keeping records through sole trader accounting software is nonetheless extremely important. VAT may also be a relevant concern for you if your turnover meets a certain threshold. If you are required to register for VAT it will be your responsibility to make required VAT returns to revenue.
Given the nature of micro businesses and sole traders, such as your local newsagents or hairdressers, time is always of the essence. One person can often be responsible for every aspect of the business. A simple sole trader bookkeeping package is needed that will keep their information in order and, crucially, save them time in doing so. Now you can spend more time making sure customers are happy, rather than the tax man.
Here at Big Red Cloud, we’d say sole trader accounting software is a must have. It will save you time, make your life easier and most importantly, set you up for success.
Related: Setting Your Startup Up For Success