Home 5 Business Support 5 Setting up as a sole trader
Setting up as a sole trader

Setting up as a sole trader

6 June 2024

Setting up in business as a sole trader is arguably the simplest way of starting and running a business.

Understanding Sole Trader Status

Setting up in business as a sole trader is arguably the simplest way of starting and running a business. The advantages of being a sole trader include independence, ease of set up and running your business, and the fact that all the profits go to you.

The disadvantages include a lack of support, unlimited liability, the prospect of paying more tax on high profits and that you are personally responsible for any debts run up by your business.

HMRC publishes some simple guidance for those looking to set up as an independent trader. The list can be found at https://www.gov.uk/set-up-as-sole-trader

 

Setting Up

The main steps listed are as follows:

  • Step 1: Check if being a sole trader is right for you
  • Step 2: Choose your business name
  • Step 3: Check what records you need to keep
  • Step 4: Register as a independent trader
  • Step 5: Check if you need to register for VAT
  • Step 6: Plan for your tax bill
  • Step 7: Get help and support

If you are looking at setting up as a sole trader we can also advise you of the many pitfalls you should avoid and if the status is the best structure for your proposed business.

In addition, it is important to understand that as a independent trader, there is no legal distinction between you and your business. This means your personal and business finances are not separate. Accurate record-keeping of all business transactions is a legal requirement, as these will be necessary for your self-assessment tax return. Operating in this way can be solitary, requiring self-motivation and discipline due to the lack of a team. However, the autonomy that comes with being a sole trader can offer flexibility in decision-making. A careful analysis of these factors is essential when considering the sole trader structure for your business.

Source: HM Government Tue, 04 Jun 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help