If you want to start your own construction business, work for yourself or hire someone else as a contractor, being a sole trader can be an easy way to get started. But it's not for everyone.
Starting your own business as a sole trader is the simplest process, since no legal or formal processes are required. You would be classified as a sole trader if you decided to start your own business.
Your business is a sole proprietorship or partnership until you choose to incorporate it. A sole trader is taxed under his or her own IRD number and is entitled to all business profits with no limitations. However, a sole trader is also responsible for all company taxes and other business debts. One of the most common types of sole traders are self employed construction workers and trades people like plumbers and electricians, painters and decorators, and they might also have other workers on staff helping run the business.
Your net profits will be subject to income tax if you run a business (your business income minus your business expenses). You will be required to file an IR3 tax return with Inland Revenue at the end of your financial year if you are a sole trader. It will indicate whether you are required to pay tax and how much taxes. When it comes to your tax return, it's important to file it correctly. Construction Accounting can assist you in doing this.
Understanding your tax obligations as a sole trader is essential, but it's also important to know how to best maximise your tax efficiency. As construction accountants we deal with a lot of sole traders, we ensure that self-employed individuals submit all their necessary returns correctly and on time - and help them make the most of their business accounts.
Tax preparation for sole traders is offered at competitive rates. To find out more, please call us on 09 217 2780.
