A sole trader is a self-employed person who owns and runs their own business as an individual. A sole trader business doesn’t have a legal identity separate to its owner, leading many to say that as a sole trader you are the business. As a sole trader, you have absolute control over your business, its assets and profits after tax.
The sole trader business model can be used by many business types, but is perhaps most popular among tradespeople. For example, plumbers, decorators and hairdressers will often be found operating as sole traders, but you will also find other types of business such as small shops and self-employed consultants trading in this manner as the business model will often be comparatively simple.
It should be noted that unlike the owners of a limited company, a sole trader is held personally liable for the business’s debts therefore their personal assets may be at risk if creditors cannot be paid. This unlimited liability, coupled with the pressure of having to shoulder sole responsibility of running the business, can lead to significant challenges.
Should you decide to set-up as a sole trader, the income from your business will be counted alongside your personal income. Therefore, you must maintain accurate accounting records that follow standard accounting practice to give a true and fair representation of the business.
This preparatory work will in turn prove to be invaluable when you come to complete your mandatory annual self-assessment tax return.
If you think that operating as a sole trader is for you, then we can help.
Barnstone Accountancy has successfully helped many Businesses to set up trading and as such we can confidently provide you with as much or as little assistance as you require.
We can provide you with an all encompassing Sole Trader formation service where we deal with your HMRC registration, supply you with all the accounting tools necessary to get you up and running, give help with your initial business planning and provide you with our Self-Assessment Tax return service, all included within our complete Sole Trader start-up package.
If you would like further information regarding setting up as a Sole Trader, then please feel free to contact us by pressing the “Contact Us” button or via the contact details listed below.
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