What is a sole trader?

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I’m trying to decide how best to set up my business, and someone mentioned to me I might want to become a sole trader. What does that actually mean?

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A sole trader is an individual person who is self-employed. You don’t need to set up a limited company to be a sole trader, you simply need to register with HMRC for Self-Assessment by providing details about you and your business. Most types of businesses can be set up by sole traders.

As a sole trader, you are responsible for filing your own tax returns and paying Income Tax and National Insurance Contributions on your earnings. You need to do this once a year.

If you decide to set up and run a business as a sole trader, you will be wholly and personally responsible for all aspects of business, including losses, debts and liabilities. You can work on your own or you can register as an employer and hire other people to work for you.

a year ago
 

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