financial documents

Why You Need a Sole Trader Accountant

Being a sole trader has its own advantages and disadvantages. What must be the most significant advantage is that you will have all the profits you can make out of your business while the biggest disadvantage is you have to do all the work.

Being the sole proprietor of a business means you have to formulate all strategies to make your business grow and succeed. To achieve your goals, you have to set targets and follow procedures which you have established yourself. All decisions are made by no one but you. Indeed, you are the employer and the employee when you are a sole trader.

Multi-tasking in sole proprietorships is the usual set-up. This is because of the low start-up capital in putting-up the business entity. With little resources, the hiring of more employees may be unnecessary. In due time as it is always the goal of all business enterprises to grow and expand, you can have more workers to help you with all your undertakings in coming up with a sustainable and profitable business.

While the hiring of more regular employees may not be a wise decision for a sole trader, hiring workers to do specialized jobs on a contractual basis make more sense. This is why your sole trader accounts should be handled by the most knowledgeable accountant out there.

Experience Makes Perfect

business targetsAccounting is a technical job. Accountants are trained to make financial statements. While you may have some knowledge on preparing your financial statements to be used in taxation and insurance, you may not be as competent as professional accountants.

Hiring an accountant to do all financial requirements for taxation and insurance purposes will eliminate errors in your declarations. Submitting erroneous financial statements may subject you to scrutiny by tax officials or worse you can be suspected of tax fraud.

Lessened Work Load

Preparing financial statements can be a stressful work to do for someone who is not used to doing it which can be made more complicated when declaring tax returns and other financial reports.

Being in a sole proprietorship is undoubtedly a taxing endeavor. From managerial functions to delivery works, you sure will be burned out at the end of the day. By hiring a professional accountant, you can spare yourself from the rigorous job of going back to your financial data and preparing pertinent requirements.

External Opinion and Audit

external auditExternal audit is important in all organizations, business or non-profit.  In sole proprietorships, external audit is almost absent.

Being a sole trader means you may not be getting outside opinion or other people’s ideas about the current state of your business because it is you and you alone who knows all about your business operations. This makes sole traders more susceptible to mismanagement from wrong decisions.

Hiring an independent accountant can solve this problem of sole traders. By asking why’s and many other why’s will give you a fair grasp of the financial condition of your business entity. An accountant, after all, also studied subjects in business management and may be able to share to you his observations about your business which can be derived from your financial statements.

taxation

Tips to Boost Your Tax Refund

During a tax season, many wonder how to get a tax refund instead of paying taxes. To increase the chance of you being refunded, there are several things you can consider doing. This will also ensure that your tax deductions are not being taken for advantage by tax accountants. Always ensure you plan early and stop running when the year is almost over.

Donating to a Charity

donations

Expenses or charitable donations related to volunteering can be deducted from one’s income at tax time. Be keen in ensuring that you save all your receipts and ensure you are keeping track of all the miles you are travelling. Keenness must be applied whether you are working for charity sake or on behalf of an organization.

Contribute to IRA or 401K

Most people are thinking the only reason for contributing to a retirement fund is ensuring they are independent financially as they age. This is true, but one can also have short-term tax benefits. In most cases, the money one puts towards his/her IRA or 401K is not included in the taxable income. IRA/ 401K are also tax deductible and have helped many people in improving their living standards.

Buying a Primary Residence

In owning a house, there is a clear tax benefit. The interest you are always paying on your mortgage is all tax deductible. For the several first years, mortgage payments have gone towards interest. This radically decreases the gross income that is adjusted at tax time.

Claiming Education Credits

In tax deduction, students tuition and or loan interest may be used. The credit includes Life Time Learning Credit covering up to $2,000 per tax return. It also grants American Opportunity Credit covering up to $2,500 yearly for four years.

Investing in Solar Energy

solar energy

If you are working on improving your home, adding solar panels to your list should be considered. Solar will assist homeowners in earning up to 30% of their installation in tax credits costs. Ensure you hurry as those credits may decrease with time. Solar panels are advantageous in that they are cheap and thus many people afford to buy.

Starting a Home Business

Starting a business and maintaining it in your home will assist you in getting a new source of income. It will also give you a chance of taking all deductions of your business generated income. The deductions may include portions of your mortgage, business expenses, repairs, utilities and business start-up costs. The business will also minimize loss of income as one can closely manage the business. It will also cut down renting costs and thus gain maximum profits.