Sole Trader Company Registration

What is a sole trader company?

Sole Trader Company is a type of business structure which is popular among those individuals who want full control over their business & its debts. Sole trader is the only person who manages the business and solely responsible for its profits & losses. There are no director’s or shareholders and there is no need to inform companies house regarding your company details but it doesn’t mean that you are not liable for tax. You need to file self-assessment tax return every year and must register individually with HMRC before 3 months of starting your business.

Why should i form a Sole Trader Company?

It is very simple to open a sole trader company and any individual can do it. Following points below not only help you in setting up your sole trader business but also helps in maintaining your business after doing registration as a self-employed person –

1. No director needed to run the business
2. No shareholder needed to invest capital. It is done by shareholder himself.
3. In case you are a contractor or a sub-contractor, register with construction industry scheme.
4. No need to register your sole trader business with company’s house.

Requirements to fulfill in a Sole trader company

1. Keep a record of your business sales & expenses.
2. Pay the due income tax on your profits and class 2 & class 4 national insurance.
3. Go for VAT registration in case your VAT threshold is above £85000.
4. In case you are moving to UK to set up your business, you need to apply for National insurance number.

Benefits of a Sole Trader Business

• It is quick and a simple way to start your business.
• Setting up as a sole trader involves a low set up cost.
• There are very few statutory obligations and less paperwork.
• You are your own boss. Whatever you want to do, you can do without consulting any director or a shareholder and can freely take your own decision.
• You can easily claim tax allowances on purchasing of business assets & expenses.
• As a sole trader, you retain all profits of your business rather than sharing it with other directors or shareholders which leads to profit maximization.
• The accounting process of a sole trader is very simple in comparison with limited companies.
• Financial information of a sole trader is kept private so that no competitor can know about your financial performance and the secrets of your business.
• As a sole trader, you can easily choose to form a limited company at a later stage. Hence, its easier for you to change your mind.