Setting up in Business as a Sole Trader
- Price: £3.60
- Published: March 2017
- Type: Business Information Factsheet
- Format: PDF
Many people who start their own business do so as a sole trader, often referred to as a sole proprietor or sole operator.
This factsheet explains the advantages and disadvantages of this type of business status. It outlines the tax requirements for sole traders, covering registering for self-assessment, record keeping, and liabilities for income tax and National Insurance. It also outlines the requirements regarding business names for sole traders.
Sole traders are treated by HM Revenue & Customs (HMRC) as self-employed for tax purposes and retain all their business profits after tax. However, they are personally liable for the debts of the business, which means that their home and other personal assets may be at risk if they are unable to pay the business' debts as they fall due.
For an overview of the different types of legal status a business owner can choose, see BIF 32, Choosing the Right Legal Status for your Business.