Sole traders

If you’re a sole trader, you’re running your own business as an individual. This is known as being ‘self-employed’. You can keep all your business’ profits after you’ve paid tax on them.

You can take on staff – ‘sole trader’ means you’re responsible for the business, not that you have to work alone.

Register for Self Assessment

You must register for Self Assessment with HMRC as soon as you can after starting your business.

Your responsibilities

You’re responsible for:

• your business debts
• bills for anything you buy for your business, like stock or equipment
• keeping records of your business’ sales and expenses
• sending a Self Assessment tax return every year
• paying Income Tax on the profits your business makes and National Insurance

Naming your business

You can use your own name or trade under a business name. There are rules on using a business name. For example, you can’t:

• use the terms ‘Limited,’ ‘Ltd’, ‘public limited company,’ ‘plc,’ ‘limited liability partnership,’ ‘LLP’ or their Welsh equivalents
• use sensitive words or expressions unless you have permission
• suggest a connection with government or local authorities
• use a name that is too similar to a registered trademark or an existing business in the same area or sector
• be offensive

You must include your own name and business name (if you have one) on any official paperwork, like invoices and letters.

Register as a sole trader with HM Revenue & Customs and legal responsibilities if you run a business as a self-employed sole trader