How to register as a sole trader

Starting a business as a sole trader can be a great way to become your own boss and work on something you’re passionate about. A sole trader runs their business as an individual and is responsible for all aspects of the business, including finances, marketing, and operations. If you’re considering registering as a sole trader in the UK, this guide will help you understand what it entails, the benefits, and how to get started.


What is a sole trader?

A sole trader is a self-employed individual who runs a business as an individual rather than through a limited company. This means the person is solely responsible for the business, including its finances, assets, and liabilities. As a sole trader, you have full control over your business, including the types of products or services you offer, how you market your business, and how you manage your finances.

How to register as a sole trader

Benefits of being a sole trader

Some of the significant benefits of registering as a sole trader in the UK include the following:

Easy set-up

One of the main benefits of being a sole trader is the ease of set-up. You can simply register with HM Revenue & Customs (HMRC) as self-employed, which involves completing a simple online form. You can start trading immediately after reporting and don't need to go through the formal process of setting up a limited company, which involves more paperwork and legal requirements.

Full control

As a sole trader, you have complete control over your business. You are the sole owner; therefore, you can make all the decisions without consulting with other stakeholders. This means that you can react quickly to changes in the market or make changes to your business strategy without having to seek the approval of others.


Being a sole trader also gives you flexibility in your working hours and location. You can work from anywhere, such as your home office or a co-working space, and you can choose the hours that suit you best. This flexibility means that you can work around other commitments, such as caring for children or family members.

Tax benefits

As a sole trader, you may be eligible for tax benefits. For example, you can claim tax deductions for business expenses such as equipment, travel, and marketing. This can reduce your taxable income and lower your tax bill. Additionally, you can claim the Annual Investment Allowance, which allows you to deduct the full cost of machinery and computers from your taxable profits.

It's important to note that while being a sole trader offers certain tax benefits, you are also personally liable for any debts your business incurs. Therefore, it's crucial to keep accurate records and manage your finances carefully to avoid financial problems in the future.


How to register as a sole trader?

To register as a sole trader in the UK, you need to follow these steps:

Step 1: Choose a business name

You can trade under your own name or choose a different name for your business. If you choose a different name, you’ll need to ensure that it’s not already taken and that it’s not too similar to another business name. You should also check if the domain name is available for your business.

Step 2: Register for self-assessment

You must register for self-assessment with HM Revenue & Customs (HMRC). This is so you can pay tax on your business profits and complete an annual tax return. You can register online, by phone, or by post.

Step 3: Register for national insurance

You’ll also need to register for National Insurance with HMRC. This is so you can pay Class 2 National Insurance contributions. You can register for National Insurance at the same time as registering for self-assessment.

Step 4: Set up a business bank account

It’s a good idea to set up a separate bank account for your business transactions is a good idea. This will make it easier to keep track of your finances and ensure you’re meeting your tax obligations.

Step 5: Keep records

As a sole trader, you must keep accurate records of all your business income and expenses. This will make it easier to complete your tax return at the end of the year. You should keep records of invoices, receipts, bank statements, and other relevant documents.

Step 6: Check if you need to register for VAT

If your business has a turnover of £85,000 or more, you must register for Value Added Tax (VAT). If your turnover is below this threshold, you don’t need to register for VAT, but you may choose to do so voluntarily.

Step 7: Consider getting professional advice

Getting professional advice from an accountant or business advisor when setting up as a sole trader is a good idea. They can help you with things like tax planning and bookkeeping to give you guidance and support as your business grows. An accountant can help you keep on top of your finances, ensure that you’re claiming all the tax deductions you’re entitled to, and help you plan for your future.

You can find an accountant through personal recommendations, online directories, or professional organisations such as the Institute of Chartered Accountants in England and Wales (ICAEW) or the Association of Chartered Certified Accountants (ACCA).


Registering as a sole trader in the UK is a simple process that provides numerous benefits. As a sole trader, you have full control over your business, can work flexibly, and may be eligible for certain tax benefits. Following the steps outlined in this guide, you can register your business, set up a separate bank account, keep accurate records, and seek professional advice when needed.

While it may be tempting to try and go it alone, seeking professional advice can help you avoid costly mistakes and ensure your business is set up for long-term success.

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