Registering a business does not have to be a daunting task for new business owners and entrepreneurs. This article will explain how you can register as a sole trader and launch your company.
So you’re starting a business. You’ve probably inquired about the best registered office address provider for your business. But have you considered if you should register as a sole trader? When you first establish a business, sole trader registration is probably the most sensible option. We can tell you precisely what you need to do to register as a sole trader.
What Is a Sole Trader?
A sole trader is a business where a self-employed individual is the sole owner of the business. The difference between a sole trader and a limited company is the latter has a legal structure where the business has a separate identity from its directors and shareholders.
There’s no significant difference between being a sole trader and being self-employed. The term “sole trader” is a description of your business structure. To say you are self-employed means no one else employs you, so you don’t pay tax through PAYE. Sole traders are the legal entities in their own right. They employ staff and enter into contracts. It’s important to note, however, that as a sole trader, you have no limited liability. If your business fails, then your personal assets are at risk.
Registering as a sole trader is fairly straightforward. Paperwork and accounting are generally minimal and the main attraction is you’re the boss.
Follow these steps, and you’ll register as a sole trader in no time!
Choose a Name for Your Business
The first step is straightforward: choose a name for your sole trader entity. Make sure it’s unique and original. If someone else is using it, you might not be able to operate under that name. So, it may be worth registering your name as a trademark to prevent other people from using it.
You can choose your personal name, or come up with an appropriate business name. If you decide upon a business name, ensure your business stationery displays your name as well as the trading name of the business. Stay clear of offensive or misleading words in your name. Moreover, your name must not include the words “limited”, “Ltd”, “limited liability partnership”, “LLP”, “public limited company” or “plc”.
Sole Trader Registration Online
If you do an online search to find out “how to register a sole trader?”, you’ll find clear instructions on how to complete the registration on the GOV.UK website. However, you will need to register for sole trade if any of the following conditions apply to you:
- Your self-employed earnings between 6 April 2018 and 5 April 2019 exceeded £1,000
- You need proof that you are self-employed to claim certain tax-free benefits
- You want to maintain eligibility for a state pension and benefits by making voluntary Class 2 National Insurance contributions.
To register as a sole trader, you will need to register for Self Assessment with HMRC and ensure you file an annual tax return.