Stuck? Try asking our expert accountant

When you own a small business, you tend to question how best to run it, particularly when it comes to balancing the books. Do I need a dedicated accountant? Could I risk crunching the numbers myself? How about buying specialist accountancy software? Or is that overkill? It’s not cheap. Is it possible to just get help when I need it? Why, when Felix Baumgartner can freefall from space and successfully land on his feet, do I continue to keep my receipts in a shoe box? A quarter of small businesses still do, apparently.

No single answer will necessarily suit, of course. Such are the multitude of ways we do business nowadays. You might already be using a quarterly or monthly accounting service. Or maybe you pay a professional a one-off fee to make sure your annual self assessment form is all in order. Then again, you might be skilled and organised enough to crunch the numbers yourself. It’s about finding what works best for you.

Small business banking apps like ours can certainly help - by itemising and sorting your expenses, or giving you a second account to set aside funds for tax. Self assessment becomes easier too, since you have everything at your fingertips, including historical records. And, getting live alerts and easy to view breakdowns of your income and expenditure undoubtedly makes life simpler.

But what about those greyer areas? What if you're not quite sure how the rules apply to your business, your working arrangements or your industry? What if you work from home, or pay a childminder? Can you claim back these expenses? If so, what percentage? And how do you accurately reflect changes in circumstances on your self assessment form?

You can waste a lot of time head-scratching as a sole trader. So we thought we’d do something to help, by giving you access to a team of expert, certified accountants contactable from the app.

Support with numbers

Our Accountancy Expert Service** will handle general queries relating to your accounts, bookkeeping and invoices. You’ll be able to ask questions straight from our in-app chat any time, and get a reply by email. So if you need help working out which expenses your business can claim back, or how to find your tax code and due date, or what obligations you have to HMRC, or how to better integrate our app into your small business infrastructure, these guys are just a tap away.

Because we’re not a regulated advisory service, we can only give general guidance, not personal advice tailored to an individual. Sometimes we’ll point you towards a more appropriate set of services or government guidance webpages, but the opinion you’re given will be that of a certified accountant. So you know you’re in good hands.

Subscribe now and ask your very own question to our experts

As we prepare for our launch, we’re keen to test our service and make sure our accounting team is limbered up. So you can get involved by submitting your question here before May 28th. Due to the number of enquiries, you’ll get an answer from our experts in up to three working days. (Once the service is available in the app, the turnaround time will usually be much quicker, and often the same day).

So. What sort of questions might you ask? Here are some examples of things our experts can help you with.

I have just started trading as a sole trader, what do I need to know?

You are a new solopreneur! Well done you! As a solo entrepreneur, you need to register with HMRC for self assessment within three months of being self-employed and complete a tax return every year.

With the new digital age, more and more people are choosing to complete their tax returns online, so the deadline for completing your tax return and paying any taxes due is 31stJanuary following the end of the tax year in April. So for the tax year ending 5th April 2019, the deadline to complete your tax return online is 31st January 2020.

However if you still preferred the old fashion paper tax return, you have a lot less time to complete this and this has to be received by the HMRC on 31st October!

The link below shows you a step by step guide of setting yourself as a sole trader Set up as a sole trader

In time, our app will be able to calculate an estimate of your taxes using data from your bank transactions so you don’t have to worry about an unexpected tax bill that will eat into your cash. The following is a handy guide for some forms that you may need to fill if you do a paper tax return. Self Assessment forms and helpsheets.

I am a sole trader, should I be using cash accounting or the traditional accruals accounting?

If you are a sole trader, you will be able to use the cash basis accounting method unless your turnover (income from doing all your work) is over £150k or if you have stock for resale, have losses, or want to claim back interest or bank charges of more than £500.

The cash accounting method is when you account for income when it’s received or when expenses are paid.

The traditional accrual accounting method is when you account for your income or expenses when they are billed or when the cost was incurred.

For example if you raised an invoice for a customer on 5th April 2018 but received the payment for on 5th May 2018, you would show this income on your 2017-18 tax return if you were using the traditional accounting method. If you were using cash accounting, you would show this on your 2018-19 tax return as this is when you received the cash for it.

How do I calculate the profit of my business for tax purposes and self assessment?

To calculate your profit, you will need to add all your income from all your trading activities and deduct your 'allowable expenses' from this.

Which expenses can I claim against my income?

You can only claim expenses incurred wholly and exclusively for carrying out your business (allowable expenses). You cannot claim any personal expenses against your trading income.

Below is a link showing which expenses you can and cannot claim.
Expenses if you're self-employed

As a sole trader, you can work out and claim either the expenses incurred against your income on your tax return to work out your taxable profit, or you can use a simplified expenses method.

A simplified expenses method works out your business expenses using a flat rate instead of working out the actual expenses. You can decide which method will work best for your business.

I work from home. How do I claim these expenses on my tax return?

If you work from home and don’t use the simplified expenses method, you will have to apportion the costs such as rent and utilities using a reasonable method. For example if you have four bedrooms in your house and you use one of those bedrooms as your office full time and your annual gas bill is £2,000 per year, you could claim £500 per year as gas expenses.

Can I claim phone expenses?

If you are using the actual expenses incurred method, you can only claim the proportion of the expense that was used for business purposes.

For example, if your phone bill is £30 a month (£360 per annum) and your phone plan is unlimited calls and texts on this plan and out of the 100 phone calls you make in a month, 10 of those are private calls. You can claim 90% of your annual phone bills on your tax return as your expense. So you would claim £324 as your business expenses.

I am a self-employed plumber who goes out to different client sites and don’t have a fixed place of work. How do I claim for the cost of my travel (fuel/mileage) of going to different client sites?

If you don’t have a fixed place of work that you travel to, you can claim for the travel costs incurred while travelling to client sites. If you are claiming for expenses using the flat rate method, you can claim for mileage expenses at the following rates: 45p for the first 10,000 miles and 25p for the miles over 10,000. Check out the following link Simplified expenses if you're self-employed

I have just started up trading as a sole trader. How do I take money out from my business for my personal expenditure and how is it treated for tax purposes?

A sole trader and their business are considered one entity, therefore you can take out money from your business bank account as drawings. If you are taking any salary like amounts (regular payments from your business for personal usage) from your business these don't need to be declared on your tax return as an expense.

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