Setting up in business as a sole trader is arguably the simplest way of starting and running a business. The advantages of being a sole trader include independence, ease of set up and running your business, and the fact that all the profits go to you.
The disadvantages include a lack of support, unlimited liability, the prospect of paying more tax on high profits and that you are personally responsible for any debts run up by your business.
HMRC publishes some simple guidance for those looking to set up as a sole trader. The list can be found at https://www.gov.uk/set-up-as-sole-trader
The main steps listed are as follows:
- Step 1: Check if being a sole trader is right for you
- Step 2: Choose your business name
- Step 3: Check what records you need to keep
- Step 4: Register as a sole trader
- Step 5: Check if you need to register for VAT
- Step 6: Plan for your tax bill
- Step 7: Get help and support
If you are looking at setting up as a sole trader we can also advise you of the many pitfalls you should avoid and if a sole trader status is the best structure for your proposed business.