If you’re a sole trader, you run your own business as an individual and are self-employed.
You can keep all your business’s profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes. You must also follow certain rules on running and naming your business.
Check what counts as self-employed if you’re not sure about your status.
How to register
To set up as a sole trader, you need to register for Self Assessment and file a tax return every year.
You’ll need to:
- keep records of your business’s sales and expenses
- send a Self Assessment tax return every year
- pay Income Tax on your profits and Class 2 and Class 4 National Insurance - use HMRC’s calculator to help you budget for this
You’ll need to apply for a National Insurance number if you’re moving to the UK to set up a business.
You must register for VAT if your turnover is over £85,000. You can register voluntarily if it suits your business, for example if you sell to other VAT-registered businesses and want to reclaim the VAT.
Working in construction industry
Register with HMRC for the Construction Industry Scheme (CIS) if you’re working in the construction industry as a subcontractor or contractor.
Naming your business
You can trade under your own name, or you can choose another name for your business. You don’t need to register your name.
You must include your name and business name (if you have one) on official paperwork, for example invoices and letters.
Sole trader names must not:
- include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘LLP’, ‘public limited company’ or ‘plc’
- be offensive
- be the same as an existing trade mark
Your name also can’t contain a ‘sensitive’ word or expression, or suggest a connection with government or local authorities, unless you get permission.
Example To use ‘Accredited’ in your company’s name, you need permission from the Department for Business, Energy and Industrial Strategy (BEIS).
Check which words you need permission to use, and who from.
You’ll need to register your name as a trade mark if you want to stop people from trading under your business name.
Help and support
You can sign up for business support emails from HMRC to help you if you’re working for yourself.