What does being a sole trader mean?
As a sole trader you run your own business as an individual and are self-employed. As a result this means that you can keep the profits made from the business after tax has been paid on them although in contrast you are personally responsible for any losses the business makes.
Registering as a sole trader with HMRC
You will need to register with HMRC if:
- You have made more than £1000.00 from self-employment during the tax year.
- If you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits such as state pension.
You will need to register for self-assessment and files a tax return each year.
Sole trader responsibilities
- You will need to ensure you keep records of the sales and expenses for your business.
- Ensure you file a self-assessment tax return each year.
- Pay Class 2 and Class 4 National Insurance contributions.
Naming the business
As a sole trader you can trade under your own name or use a business name providing it meets certain criteria, further information can be found here
If your businesses turnover exceeds £85,000 you will need to register for VAT.If you work within the Construction Industry as a contractor or subcontractor you will need to register with HMRC for the Construction Industry Scheme.
If you would like further advice and a free 30 minute consultation contact AJR & Co Ltd