If you’re a sole trader You may own more than one business. The positive side is that it’s acceptable to have multiple, companies sole traders may run more than two (or perhaps more!) businesses. A sole trader is the most straightforward business structure. It means you run your business as an individual, and all profits earned after tax are you to retain.
Do I have to declare each sole trader’s company independently?
What does this mean for your tax bill, the VAT, and National Insurance?
· Tax and NI for sole traders who have multiple businesses
· Tax for sole traders that have various businesses
Can I still be eligible to receive the allowance for trading?
Do I have to sign up each sole trader’s business in a separate manner?
Being a sole trader does not necessarily mean you need to renew your self-employment registration. If you choose to do this, HMRC will issue you a second UTR number and require you to submit individual tax returns to each company. Instead, you’ll file a self-assessment tax return with a separate tax section to address every company.
How will this affect my tax or VAT? What about my National Insurance?
You must be aware of VAT, tax, and national insurance ramifications if you run several sole proprietorships in the company. We’ve broken them into sections below to make it easier for you to comprehend.
Tax and NI for sole traders who have multiple businesses
If you file a Self- Assessment tax return, you must fill out the self-employed income’ segment for every company. The tax and NI you must pay as a sole trader are calculated based on the sum of your profits.
Unfortunately, you’ll only receive the Personal Allowance one time instead of an allowance for every company. So, the tax-free Personal Allowance applies only to the total value of everything.
Tax for sole traders who have at least one company
Sole traders may operate more than one business. However, they must remember that they’re legally distinct from any sole trader company they own. This means that you need to consider the entirety of your sole trader’s income from each business to ensure you’re registered for VAT as required.
You must be VAT registered when your business’s turnover exceeds the threshold for VAT registration in any 12 months. If you operate more than one business, the total revenue from all your business’s earnings will be used to determine whether you have met.
Since VAT registration can be for all your business, customers must pay VAT. This is not ideal for all your interactions.
Do I still have the right to receive the allowance for trading?
The allowance for trading is a tax-free amount that can be used for trade income that is not taxable up to £1,000. It’s a tax relief available to sole traders and people who operate business ventures that are not their primary focus. If your company’s income is less than £1,000 annually, you don’t need to apply with Self -Assessment or pay tax.
Please speak to a member of our team members about our online accounting solutions for sole traders. Contact us on 0208 133 4599 and visit us on our Account Ease website.