Sole Trader
A sole trader is the easiest structure to use to start a business.
That said, it’s certainly not risk free!
The key feature of this trading style is that there is no limit at all to the liability you may face. Creditors can come after you as an individual for any debts incurred by your business, and you will suffer any losses made too.
The profits you make as a sole trader are included in your Self Assessment Tax return, which must be submitted by the 31st January each year.
There are a few hurdles you must cross as you set up your business, as follows:
- Register for Self Assessment with HMRC as soon as possible. The deadline to do so is the 5th October in your second year of business to avoid penalties.
- Register to pay National Insurance and register for VAT if you expect to exceed the current registration limits. These change annually so please check the current levels.
- Set up a separate bank account for use for your business, even if you are trading in your own name. This keeps your business income separate from your personal affairs, which keeps things far easier from an administrative (and HMRC) perspective.
- Check whether you need office insurance or indemnity insurance, and whether your car insurance will cover you for business use.
- Speak to a solicitor for Terms and Conditions that will outline the way in which you will work with your customers. This will be a fee that you’ll want to avoid, but it will prove its worth when you have the first customer who chooses not to pay!
- If you have a website and will be processing customer data, make sure you include a Privacy Policy to adhere to GDPR.
If you are just setting up your Sole Trade, please ensure you seek advice to ensure you are considering all that you should. There may be requirements or considerations in your industry that we haven’t detailed above.
Many of the business development, management or software posts across the Information Centre will be relevant to you as a Sole Trader, so do take a look at the other sections while you are here.
Related News Items
Why not take a look at these sections too, as there is some overlap between our categories and we’d hate you to miss out!
Related Info
Why not take a look at these sections too, as there is some overlap between our categories and we’d hate you to miss out!
Accountancy
Management & Growth
Software
Glossary
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I could not speak more highly of Liz and Chris at Baranov Associates.
They are not only incredibly efficient with all things tax related for me but they were also patient and clear with their tutorials on Xero, going above and beyond to make sure everything was working properly for me.
I’m a huge fan of them in general.
Mrs O Emery
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