If you’re a sole trader or partnership with an annual turnover of less than £79,000 then you don’t need to register for VAT or worry about any complex accounting practises in your business.
Instead, you can do what is known as ‘cash-basis accounting’ – the simple recording of money coming in and going out (whether this is actual cash, cheque, credit card or direct payment into your bank account).
In the recent Finance Bill 2013, the UK Government has set out to make accounting even simpler for the smallest of businesses following a ‘Review of Small Business Taxation Report’ which was published by HMRC in February 2012 and opened up for consultation during the summer.
We have been part of the consultation process from the beginning and are pleased to say that our entry level Sage One Cashbook software has already been listed on the HMRC website as one of just two Simpler Income Tax applications and software solutions.
Why is HMRC doing this?
Some of this is driven by the coalition Government’s desire to reduce red tape and make things less burdensome for the smallest of businesses. It’s also in recognition of the fact that more people have been moving into self-employment in recent years that have little or no prior knowledge of accounting and are often confused by the current tax system.
- Between 2008 and 2012 there has been a rise of 367k in self-employments of which 219k was between 2011 and 2012. (Meanwhile, there was a 434k reduction in employments)
- In June 2012, 14% of the employed population was self-employed amounting to 4.2 million people
- A significant proportion of these are construction or driving-related, for example joiners, builders, plumbers, taxi-drivers, driving instructors and men over 40 years old!
- A large proportion fall under the annual VAT threshold of £79,000
These new business owners all need simple accounting solutions to support them which is where we come in…
Sage One is deliberately simple!
One of our guiding principles here at Sage One is to keep our software as simple and easy-to-use as possible, only putting into it what our customers really need instead of filling it with lots of unnecessary features they won’t ever use.
Sage One Cashbook is our simplest and easiest-to-use accounts package and at just £5 + VAT per month (which includes free 24hr telephone and email support) offers just what most sole traders need.
So if you’re self-employed, take a closer look at Sage One Cashbook and sign up for a free 30 day trial at http://uk.sageone.com/cashbook
(For a more advanced version which is still less complicated than other accounting software, we have Sage One Accounting for just £10 + VAT per month which also includes the free 24hr support).