Sole Trader

If you’re a sole trader, you run your own business as an individual and are self-employed.

You can keep all your business’s profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes.

Sole traders must register with HM Revenue and Customs (HMRC) and follow certain rules on running and naming their business.

Your responsibilities

You’ll need to:

  • keep records of your business’s sales and expenses
  • send a Self Assessment tax return every year
  • pay Income Tax on your profits and Class 2 and Class 4 National Insurance - use HMRC’s calculator to help you budget for this

You’ll need to apply for a National Insurance number if you’re moving to the UK to set up a business.

VAT

You must register for VAT if your turnover is over £83,000. You can register voluntarily if it suits your business, for example if you sell to other VAT-registered businesses and want to reclaim the VAT.

Naming your business

You can trade under your own name, or you can choose another name for your business. You don’t need to register your name.

You must include your name and business name (if you have one) on official paperwork, for example invoices and letters.

Business names

Sole trader names must not:

  • include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘LLP’, ‘public limited company’ or ‘plc’
  • be offensive
  • be the same as an existing trade mark

Your name also can’t contain a ‘sensitive’ word or expression, or suggest a connection with government or local authorities, unless you get permission.

Example

To use ‘Accredited’ in your company’s name, you need permission from the Department for Business, Energy and Industrial Strategy (BEIS).

Check which words you need permission to use, and who from.

You’ll need to register your name as a trade mark if you want to stop people from trading under your business name.

KLAS Ltd can help with all areas relating to Sole Trader accounts. Please call to discuss with one of our accountants with no obligation on 0151 556 1221

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