A sole trader is someone who is self-employed and is the sole owner of the business. They may operate using a business name but everything they earn is treated as part of their personal income and they’re personally agreeing to any contracts or other arrangements they sign.
A sole trader is an individual who is self-employed and the only person owning the business. The business may be either the name of the owner or any business name they choose. As a sole trader, they personally agree and are personally responsible for any contracts they enter into.
It is easy to set up as a sole trader. All that is required is a National Insurance number and register for self-assessment at the HMRC website. We can help to simplify this process by doing it on your behalf. The whole process is of low cost and easy to do.
As a sole trader, you have unlimited personal liability for everything that happens within your business.YOU are held personally responsible financially and legally for any claims or errors. Your home, personal belongings and any investments you may have are at risk if you have any problems. Obtaining finance to expand or support your business will be more difficult as a sole trader as compared to a limited company. The personal tax rate is higher than Corporation Tax which is paid by limited companies.
- Sole Trader status is quick and easy to set up
- Decide on your business name
- Set it up at HMRC site
- Low cost set up
- More privacy than compared to a limited company
- Sole Traders are fully responsible for everything that happens in the business
- Unlimited personal liability
- Personal belongings and property is at risk
- Obtaining finance will be difficult
- Taxation as a sole trader is taxed at a higher rate than as a limited company
- Far more in-depth bookkeeping and reporting
It may look like it is better to register as a limited company but the additional legal responsibilities often make it best to act as a sole trader. We can provide additional advice in this area once we get to understand you and your aspirations.
Please contact us for further advice.