Sole Trader
Set up: You need to register with HMRC as self-employed (tel 0845 915 4515).
Accounting records: You have to make an annual Self Assessment Tax Return to HMRC. You must also choose an accounting year end date and keep records showing your business income and expenses.
Profits: All profits after tax go to you.
Tax & National Insurance: As a self-employed trader, your profits are taxed as income. You also pay flat rate Class 2 National Insurance contributions (NICs) and Class 4 NICs on your profit.
VAT: If your turnover exceeds the registration threshold you need to register for VAT. Alternatively you can register voluntarily. See VAT page for more detail.
Liability: As a sole trader, you are personally responsible for any debts incurred by your business. This means that your home or other assets may be at risk if your business runs into trouble.
Business stationery: Business stationery must include the following:
• Business name
• Name of proprietor if different
• Business address
• VAT registration number if appropriate (invoices only)
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