Skip to content

How to Register as a Sole Trader

  • by

Statistics tell us that over 50% of British businesses are run alone. Sole traders are therefore very important to business in the UK. You could say that the success of sole traders is a key to the success of the British economy as a whole.

Sole traders run their business alone, allowing them the huge positive of full control and making them an attractive prospect. They are particularly suitable for workers in the service sector, such as hairdressers, plumbers or guest house owners.

It does not follow that because you are a sole trader, you have to do everything by yourself; you are permitted to employ staff. However, if you decide to take on other workers, it will be your responsibility to guarantee that all rules of employment are followed stringently.

The rules and regulations.

Setting up as a sole trader is actually relatively straightforward. For a start, there is no cost to register your business. However, it is vital that a business is registered with HM Revenue and Customs (HMRC) within three months in order to avoid incurring a fine. Nowadays, the options of registering online or over the phone are probably the quickest and easiest; just make sure that you have key information, such as your NI number, to hand.

There are stringent guidelines to follow when registering, particularly when it comes to a name. To sidestep any issues in this area, using your own name is a sensible option. The rules are lengthy; you aren’t permitted to use Limited or Ltd or anything similar and offensive words or terms need to be avoided. You can’t choose a name too similar to one that already exists or a name that implies a connection to a wider business. Yes, Marks and Spencer is not the same as Mark and Spencer, but it would be pushing your luck!

Consulting local business listings should give you an idea of names to avoid or you could enlist a solicitor to check your chosen brand prior to registering. Whatever you decide upon, ensure that it is used consistently across all business related items. If all letterheads, invoices and so on carry the name, it will strengthen and secure your brand.

Money, money, money.

Record keeping for a sole trader should be as straightforward as the initial registration as long as it is completed regularly and methodically. Something to remember as a sole trader is that the money in your business is intrinsically linked to your private and personal wealth. This means that debts incurred by your business can become debts incurred by you personally. As a sole trader, you are also responsible for the costs of stock and equipment required. The recording of all incomes and outcomes, as well as the payment of National Insurance, also falls at your door.

To avoid financial risk, you might want to employ the services of an accountant in order to keep books balanced. In addition to this, an accountant can take responsibility for your tax return   a somewhat daunting prospect to the uninitiated.

Setting up as a sole trader can offer a freedom of choice that is unrivalled. Just make sure that guidelines are followed carefully in order to get started quickly and make the most of your new business.

Leave a Reply

Your email address will not be published. Required fields are marked *