When Self-Assessment/the Tax Return was introduced by Her Majesty’s Revenue and Customs, its aim was to simplify taxation for individuals, making it easier to produce and submit a tax return. For the current tax year 2018-2019, the deadline for online filling is 31st January 2020.
Many people find the personal tax return difficult to understand and they are at risk of incurring penalties if it’s not correct. This is where Fair Books steps in and can take this administrative burden off your shoulders. For further details please contact our tax return team.
Self-employed – Sole trader
A Sole trader is the simplest form of business structure and it is relatively easy to set up. As a sole trader you will be legally responsible for all aspects of your business, making all the decisions about starting and running your business. If you’re operating as a sole trader, there is no legal requirement for you to open a business bank account. You can use a bank account in your personal name.
Sole Trader advantages:
Simple to set up and manage.
Possession and complete control of your assets and business decisions
Any losses incurred by your business activities may be offset against other income, such as investment income or wages (subject to certain conditions).
Allows you to use your unique taxpayer reference number (UTR) to submit your tax return.
You are not considered an employee of your own business and therefore you don’t pay associated payroll taxes
Relatively easy to change business structure if your business grows or if you wish to wind things up
Sole Trader disadvantages:
Unlimited liability which means all your personal assets are at risk if things go wrong.
You cannot split business profits or losses with family members and you are personally liable to pay tax on all the income from the business
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Partnership
A partnership is an agreement where two or more parties, known as partners, decide to act together to aid their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organisations, schools, governments or combinations of these. Partners share the business profits, and each partner pays tax on their share.
To set up a business partnership, you need to choose a name and a ‘nominated partner’ of the Partnership. The ‘nominated partner’ is responsible for managing the partnership’s tax returns and keeping business records. For the current tax year 2018-2019 the deadline for online filling is 31st January 2020. If your business operates as a partnership, then it must have a separate bank account for tax purposes.
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