Setting yourself up as a sole trader is probably the quickest and easiest way to get your business up and running. There are no formal set up costs, you don’t need to register at Companies House and the administrative obligations are not too onerous.
It is still a serious commitment, though. You make all the decisions and you are responsible for managing the business on a daily basis. There is all sorts of help and advice out there, much of it for free, but ultimately you need to be prepared to take full responsibility – financially and legally – for your business.
You also need to inform that tax man that you are working as a sole trader, and it is your responsibility that you comply with your tax obligations and pay any tax that is due.
Free Sole Trader Guide
To learn more about starting your own sole trader business and whether this option is right for you, take a look at our FREE guide which explains the process in more depth and provides key information you need to allow you to make an informed decision that is right for you.
If you require further information about the different ways of working available to you, call our New Business Team on 0800 230 0213
Or email firstname.lastname@example.org.
It might not be as tax efficient as a limited company, but because it is so simple to set-up and requires less administration, working as a sole trader is often many people’s first experience of working as a self-employed professional.
Some of the main benefits include:
As a sole trader, you and your business are one. It is not a separate entity, with its own legal status, and possibly other directors or shareholders to consult. You are in total control.
The paperwork is simple, there are no official forms to fill in and there is no need to register your business at Companies House. Simply inform HMRC that you are self-employed, and off you go.
Unlike a limited company, where all the information about the business is on the public record, including directors’ details and company accounts, you can keep all your information totally private.
If you need to buy things for your business, like PCs, tools or furniture, for example, you may be able claim tax relief on them, reducing your tax bill at the end of the year.
You are the sole decision maker, so you can quickly adapt and change your business to suit the market, keeping you agile and competitive.
The accounting process is much easier for sole traders. You still need to maintain detailed records of your invoices and expenses, submit annual accounts and file a annual tax return, but in general there is less bureaucracy than running a limited company.
As the name suggests, as a sole trader you are in sole charge – so you get to keep all the profits of the business.
Staying Connected to your finances
At Brookson, we are committed to providing you with the information you need to run a sole trader business in the best possible way. That’s why we have invested over £3m in our unique Connect service, to bring you a daily picture of your business finances, 24/7.
Connect brings together all the different strands of your sole trader accounts – invoices, statements, expenses, tax liabilities – in a single portal that is available 24/7.
It delivers your information in a smart and intuitive way with helpful information such as ‘one number’ - the amount you can safely take out of your sole trader company after your tax liabilities have been accounted for. Brought up-to-date daily, it is virtually real-time accounting.
Of course, it is all backed up by our Specialist Support Team six days a week, so you are never left to fend for yourself, and you benefit from the reassurance that your business is totally compliant with HMRC guidelines.
Have a Specific Question?
Call us today on 0800 230 0213 for free and friendly advice or email us.