The short version: A sole trader is someone who runs their own business as an individual. There’s no legal distinction between you and your business. It’s the simplest way to work for yourself.
What do you need to do?
Register with HMRC as self employed by 5th October following your first tax year of trading. Keep records of income and expenses. File a Self Assessment tax return by 31st January each year. Pay your Income Tax and National Insurance.
Is it different from limited company?
Yes. A limited company is a separate legal entity. As a sole trader, you and your business are the same thing legally. This means simpler admin but also personal liability for business debts.
Can you switch later?
Yes. Many people start as sole traders and incorporate later when their income grows or they want liability protection. There’s no obligation to stay as a sole trader forever.
Just starting out as a sole trader? We can help you get everything set up correctly.
