Sole Trader Accounts

Setting up as a Sole Trader is the simplest way of starting a business with very few formalities. You will need to advise the Inland Revenue that you are self-employed for tax and National Insurance contributions. They will provide the relevant guidance booklet and notification form upon request.

Being a Sole Trader does not involve paying any registration fees. Keeping records and accounts are straightforward.

However, you are personally liable for any debts that your business accumulates. This means your home or other assets may be at risk if your business runs into trouble.

Being a Sole Trader requires you to submit a Self Assessment Tax Return to HM Revenue & Customs, therefore you must keep records showing your business income and expenses.

As you are self-employed, your profits are taxed as income and you also need to pay fixed-rate class 2 and 4 national insurance contributions on your profits.