Are you already trading or considering starting a business as a sole trader? We can help as we are a 'one-stop-shop' for accountancy services and tax advice for independent businesses and self-employed professionals.

 

Setting up as a sole trader

You should look at setting up as a sole trader if you are self-employed or plan to become self-employed in the near future. The UK Government revealed that 76% of British small businesses were sole traders. A sole trader is someone who works for themselves.

 

When you register as a sole trader, you agree to accept personal financial risk. As your business is not a separate legal entity, you would be personally liable for any debts or legal action against your work. This differs to a limited company, whereby business owners only have limited liability.

 

Deciding whether to set up as a limited company or not is a key decision for all business owners. There are a number of key differences, including  tax advantages when changing your business status from a sole trader to a limited company. You can find further guidance on limited companies here.

If you do decide that being a sole trader is right for you, consider the tax implications when you register as self-employed. Depending on your annual income, you may also be required to become VAT-registered.

 

As with any business, when you work as a sole trader, you should keep detailed records of all your income and expenses. Basic bookkeeping software can make it easy to log invoices, receipts and expenses. This makes it easier when the time comes to submit your self-assessment tax return to HM Revenue and Customs (HMRC), which is a legal requirement for all sole traders.

 

If you are still figuring out how to set up as a sole trader and you are taking time to define your business proposition, we can help you to finalise a detailed business plan. This acts as the roadmap for your start-up business and can provide clarity and certainty for sole traders seeking business finance from banks or alternative finance lenders.