Expert Information for People Wanting to Become Sole Traders

If you want to start up your own business, then becoming a sole trader is the easiest way to go about it. For one, you won’t have to pay any registration fees, and it’s a lot easier to keep a tight rein on your finances. The best thing about being a sole trader is that you are your own boss, and that means working when you want, and for as long as you want – you’re the boss!

Although it is pretty easy to become a sole trader, doing it all yourself can be a daunting prospect. Everyone dreams of being their own boss at one point or another, but when it comes down to it, many will side with a steady employer and all the benefits that come with a regular monthly wage.

Thankfully however, there’s nothing to be scared about, so sit back and relax while we give you some expert information about being a sole trader.

Choosing a Name

Although this might seem obvious, you must make it clear what name you are going to be trading under. The name you trade under must accurately reflect your business, otherwise you may find it hard for customers to find you. You’ll want to come up with an original name for your company, and this means steering clear of names that are already taken. Why not take your birth name, and then add something onto the end to reflect what industry you’re in – ‘Kevin Smith Bookkeeping’ for example.

Tax and VAT

As soon as you start trading as a sole trader, you must register yourself with the HMRC – not doing this within the first 3 months of becoming a sole trader could land you a hefty fine! To register with the HMRC, go to their website and follow the simple instructions, it only takes 5 to 10 minutes.

As a sole trader, you will have to pay income tax on your profits, and that means filling out a self-assessment return every year. Keeping your finances and records up to date will be very useful in the long run, so make sure you make extra notes of everything that comes into your account.

If you run a small operation, then you won’t have to worry about paying VAT. If your business is expected to generate over £60,000 in a year however, you’ll have to apply for a VAT number. This number allows you to charge your customers VAT, for you to then pay the HMRC VAT on your services.

Special Licences

Although you can start trading as soon as you become registered as a sole trader, other lines of self-employment may require you have a special licence or permission from local authorities in order to legally trade. For example, child minders, taxi drivers and buskers all have to apply for special licences from their local council before being allowed to trade. If you are unsure about what special licences you might have to apply for, contact the HMRC and explain your circumstances – they’ll be happy to answer any questions you may have!

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