How To Quickly Register A Sole Trader Business In The UK
Easy step-by-step guide
If you’re thinking of going into business for yourself in the United Kingdom, you’ll need to register as a sole trader. This can be done online, and the process is relatively simple.
Who can register as a sole trader in the UK?
Obviously, it will depend on a case-by-case basis, but usually, you must comply with the following conditions:
- Be a resident of the UK(live for more than 6 months per year in the country)
- Be over 18 years old.
- Have a valid NINO number.
What are the benefits of registering as a sole trader in the UK?
As a sole trader in the UK, you have many advantages, including:
• The ability to set your own hours and work as your own boss
- You are only required to pay tax on your profits, not on your entire income, like employed people
- The paperwork is much easier to do, compared to a company(Ltd, Plc, etc). Basically, you only need to file a self-assessment paper every year, for the last financial year
- You can employ family members to help with your business
- There are easier eligibility criteria for sole tradership, so almost anyone can start their own business
What do you need to start a business as a sole trader in the UK?
Basically, nothing special.
You can start your business straight away. Let’s see an example for a better understanding.
John is a skilled painter, but he is tired of his actual workplace. He wants to be independent. We are in July 2022. John needs to follow the next steps:
- Quit his job!!! The most important part. Or not. You can be employed and do a side business anytime. The only thing you should check is if your work contract allows you to have a business on the side, especially if you're competing with your employer in the same industry. If John works for a painting company and wants to start a side business as a painter, his contract could prevent him from doing that.
- Check if he needs any licence from the council or other authorities. There are some businesses that require a special permit. For example, you can always start a small business as a gardener, but if you want to sell food, you will require certain licences.
- Buy tools, a van, and any other materials that are necessary for his painting business. He keeps the receipts because he will need them later to claim expenses. This includes diesel receipts and van insurance, but only the ones that are strictly related to his business.
- Uses another bank account for his painting jobs. There is no need to open a proper business bank account as a sole trader, you can use any account. I do recommend using an account just for your business. It is a good practice to keep your business expenses separate from your personal account.
- Look for his first customers on social media, local ads, or simply handling flyers about his business to his neighbours and other people in his local area.
6. Invoice his customers and give them a copy as well(printed or electronically).
7. If Johns makes more than 1000 pounds in this financial year, which is from the 6th of April 2022 till the 5th of April 2023, he has to register for self-assessment on the government site. The deadline is the 5th of October 2023.
8. After his first year of business, John MUST submit his self-assessment form to HMRC by the end of October 2023(on paper), or by the end of January 2024, if he submits his taxes online.
9. John will pay taxes and NINO contributions on his profits. He just needs to add up all his invoices and subtracts the business expenses from this financial year.
In conclusion, there are many benefits to registering as a sole trader in the UK. These include the simplicity of the process, the low cost of registration, the flexibility it offers in terms of how you run your business, and the fact that you are not subjected to the same regulations as limited companies.
If you are thinking of starting your own business, registering as a sole trader is a great option to consider.
There are other aspects to consider, like hiring workers and business insurance, but we will get into details in the following articles.
Disclaimer:
This article was made with the help of:
GRAMMARLY — grammar check(affiliate link)
SIMPLIFIED — AI writer and Graphic design tool(affiliate link)
You can join Medium for only 50 USD per year, to unlock unlimited article reading, and to support writers like myself:
My website www.lazybusiness.uk was built with the help of ZYRO website builder(affiliate link)
