If you have rental income for a property or properties as a Sole Trader, you might be wondering whether to include that income in your Ember account.
Generally speaking, we would advise against recording the income in your Ember account. There are a couple reasons for this which I will outline below:
Clarity in Self-Assessment
One of the primary reasons why we recommend not including rental income in your Ember accounts is to maintain clarity in the self-assessment process.
By keeping rental income separate from your business accounts, you can clearly distinguish between the two income streams. This separation makes it easier to accurately report each source of income
Accuracy of your financial reports
Including rental income in your Ember account can distort the accuracy of your financial reports. Financial reports are essential for evaluating the performance and financial health of your sole trader business. When rental income is mixed with business income, it can lead to misleading financial statements that don't reflect the true financial picture of your business operations.
Keeping rental income separate allows you to track and analyse your business income and expenses more accurately, enabling you to make informed decisions and plan for the future effectively.
How do I record rental income?
We would recommend that you keep track of your rental income and expenses separately and have the documentation ready for when you want to file your self assessment. You can then declare the rental income on the self assessment questionnaire provided in your Ember account.
By declaring rental income separately, you can access the appropriate tax reliefs and deductions that apply specifically to rental income. This can help you minimize your tax liability and ensure that you are not overpaying or underpaying your taxes.