What is a Sole Trader?

Sole Trader
A sole trader is a business that is set up, owned and run by one person. As a sole trader you will be self-employed and entitled to keep all after tax profits but you are also liable for any debts the business incurs.

A sole trader is a self-employed person who is also the sole owner of the business they run. As a sole trader, you can keep all profits made by your business once you’ve paid any tax owed to HMRC.

However as a sole trader you have ‘unlimited liability’ for any debts your business incurs. So if your business makes a loss, you are personally responsible for the debt.

Sole traders have to file a Self Assessment Tax Return every year with HMRC, which is far less paperwork than a limited company has to complete. Less paperwork is one reason why small business owners might initially prefer to register as a sole trader rather than as a limited company.

All sole traders have to be registered with HMRC. You will also need to register for VAT Threshold if your turnover is exceeds £83,000 per year. As a Numberworx customer, we can guide you through the process of registration. Our cloud-based software will keep your accounts up to date, and we’ll even complete and file your Self Assessment Tax Return.

Registering as a sole trader

You can register as a sole trader on the HMRC website. However if you have any questions or would like advice on whether registering as a sole trader is the best option for you, one of our bookkeeping will be happy to help.

Any questions?

Numberworx customers receive free, unlimited advice on all aspects of their bookkeeping and accounting. However, even if you are not using our service, we’ll do our best to answer any questions you have.