You’re a sole trader if you’re running your own business as an individual. You can keep all your business’ profits after you’ve paid tax on them. Setting yourself up as a sole trader is the quickest and simplest way to get your business up and running. Working as a sole trader is still a commitment. You make all the decisions and you are responsible for the administration, and being a sole trader doesn’t mean you have to work alone, you can take staff on.
You’re personally responsible for any losses your business makes, receipts for things you buy for your business, like stock or equipment and keeping records of your business’ sales and spending.
You must register with HM Revenue & Customs (HMRC) as soon as you can after starting your business. If you register later than 5th October in your business’ second tax year, you could be charged a penalty. If you start up as a sole trader during tax year 2015 to 2016, you must register before 5th October 2016.
You must register for VAT if you expect your business’ takings to be more than £83,000 a year.
Choosing to operate as a sole trader offers great freedom and high degree of flexibility, but it is not the best route for everyone. You should consider your options carefully. If you are still considering the best way to run your business, Brookson provides a number of Free Guides that will help you make the correct choice.
Keeping accurate business records is really important to help you when you come to complete your Self-Assessment tax return, or answer any questions HMRC might have. You and the business are treated as a single entity for tax and administrative purposes, but you should still keep your business records and your personal records separate.
You must keep a record of all your sales and expenses. These are used to create profit and loss account for your business. The more detailed the records you maintain, the easier it will be to complete your return each year.
Operating as a sole trader doesn’t have the same legal complexity as running a limited company, but you need to make sure you understand some key issues. In this section we look at claiming the correct Expenses, explaining your Personal Tax and NIC obligations, considering some helpful Tax Planning and talking you through VAT should you reach the threshold. We also introduce you to some key Business Partners that Brookson believes can contribute to your success.
By working as a sole trader, without limited liability protection, it is essential to insure your business effectively. This demonstrates professionalism, and may be a requirement from your customers as part of any contract with them.
The main types of cover to consider are:
We offer an exceptional insurance package through our insurance partners, Kingsbridge, covering all of these key elements.
Please be aware that by submitting your details you are accepting to receive future updates regarding Brookson services. Your information may also be disclosed to carefully selected third parties.
Full details of the Data Protection Policy can be found here.
To ‘opt out’ of all future Brookson marketing material, please email Marketing@brookson.co.uk
Rights to Privacy: Your details will not be disclosed to any third party that is not associated with Brookson Limited.