Running your business as a sole trader gives you independence, but it also comes with financial responsibilities—especially when it comes to tax.
Here are the most common tax mistakes sole traders make and how you can avoid them to stay compliant and protect your profits.

1. Poor Record-Keeping

Not tracking income and expenses properly leads to errors and missed deductions.
Tip: Use cloud accounting tools like QuickBooks or hire a professional bookkeeper to keep your records clean and audit-ready.

2. Missing Filing or Payment Deadlines

Late submissions can result in HMRC penalties and unnecessary stress.
Tip: Mark the Self-Assessment deadline (31st Jan) and payment dates in your calendar. Better yet, let a tax advisor handle it.

3. Forgetting to Claim Legitimate Expenses

From travel to software subscriptions, many sole traders fail to claim all eligible deductions.
Tip: Keep receipts and consult a tax specialist who understands what’s claimable.

4. Ignoring VAT Thresholds

If your income exceeds £90,000, you must register for VAT—yet many traders miss this.
Tip: Monitor turnover regularly. Early VAT registration can sometimes save money too.

5. Going It Alone

Trying to manage taxes without guidance often leads to missed savings or compliance issues.
Tip: Work with a tax professional to maximize reliefs, file accurately, and grow confidently.

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