Straight answers for business owners

One of the most common questions we hear, and the honest answer is: it depends on your profit level and your plans. At lower profits, staying a sole trader is often simpler and cheaper. As profits grow, a limited company can become more tax efficient, and there are non-tax reasons too, like limited liability and credibility.

The key is getting clear, specific advice for your numbers before you decide, rather than following a rule of thumb. We can run the comparison for you.

What it means for you

If you are a sole trader, Making Tax Digital for Income Tax is already here. It is live now, from 6 April 2026, for anyone with qualifying income over £50,000, replacing the single annual return with quarterly digital updates through compatible software. The threshold then drops to £30,000 from April 2027 and £20,000 from April 2028, so most sole traders will be brought in over the next couple of years.

The catch most people miss: the threshold is based on your GROSS income, your total turnover before any expenses are deducted, not your profit. And if you also receive rental income, your self-employment and property income are added together to test the threshold. Reassuringly, employment wages, dividends, pensions and savings interest do NOT count, only self-employment and rental income do. So if your combined top line is over the threshold you are in, even if your actual profit is much lower. It is worth checking exactly where you stand now, rather than assuming you are below it.

One group often left out of the conversation: partnerships. For now, partnerships are not within Making Tax Digital for Income Tax, and a partner's share of partnership profit does not count towards their own qualifying income either. But HMRC has confirmed partnerships will be brought in at a future date, it simply has not said when yet. If you run a partnership, it is worth being aware it is on the horizon, so you are ready rather than caught out when the date is announced.

Xero, QuickBooks, Sage and FreeAgent are all HMRC-recognised for Making Tax Digital, but they suit different businesses. The right choice depends on your size, whether you need payroll, how many users, and crucially, which software your accountant works in.

We help you match the software to how you actually work, so it does the job with the least effort and cost.

Here is something many business owners miss. If you are opening a business bank account, the bank you choose can get you your accounting software free or nearly free.

Open a Mettle account (NatWest's free digital business account), or bank with NatWest, RBS or Ulster Bank, and you can get FreeAgent completely free for as long as you hold the account. Worth knowing before you pick a bank.

This is the one most people overlook, and it matters more than ever. When you move from one accounting system to another, not all of your records necessarily come with you. Some migration tools only carry across a limited window of data.

If you switch and only part of your history transfers, you could be exposed in a compliance check, which can reach back years. Before you migrate, make sure your full records are retained and accessible. We can guide you through doing it cleanly, so nothing is lost.

There is a wave of change landing for businesses and individuals, from Making Tax Digital and Companies House reform to tighter scrutiny on how value is taken out of companies. We keep a clear, plain-English timeline of all of it, with the official sources, so you can see what is relevant to you.

Sometimes the right questions go beyond accounting, into pensions, investments, inheritance and protecting what you have built. We work alongside trusted wealth and financial planning partners, so if your needs reach into that territory, we can point you toward the right people. Joined-up advice, from people who talk to each other.