If you are self-employed or plan to become self-employed in the near future you should look at becoming a Sole Trader. In recent studies, over three quarters of all British small businesses are registered as sole traders.
When you become a sole trader, you agree to take on personal financial risk for your business. As your business is not a separate legal entity, you would be personally liable for any debts or legal action against your work.
Deciding to set up as either a sole trader or a limited company is an important decision for any business and we will guide you through the process and assess your best options. It is important to understand there are tax and liability advantages when changing your business status from a sole trader to a limited company.
If you do decide that being a sole trader is right for you, we will assess the tax implications when you register as self-employed. You will need to consider how the level of your annual income may require you to become VAT-registered.
As a sole trader, you need to record your income and expenses. We will help you set up bookkeeping software that will log your transactions and keep your records up to date and ultimately help submit your self-assessment tax return to HMRC. HMRC use the Self-assessment system to to collect income tax and National Insurance contributions from your business. You will need to register yourself for self-assessment with HMRC and GRC Accountants will assist you with this process.
Registering your business
The first step in setting up your business, is to register your business name, we will manage this simple process on your behalf, you should give your business name careful thought as it should be memorable and suit your business activities. When registering a business as a sole trader, you may also have to consider sole trader insurance and any licenses or permissions to operate your business lawfully.
Can you be a sole trader and be employed at the same time?
If you wish to run a self-employed business as a second income alongside other employment, you will need to confirm that your employment contract allows this. You must also declare and pay your own tax and National Insurance on your secondary self-employed income via a self-assessment tax return.