Being a sole trader means trading as an individual responsible only to yourself. If anyone else works with you, you have to pay them as an employee or subcontractor. Not regulated by anyone other than HMRC.
Must prepare accounts in accordance with FRS102 (section 1A if applicable). Cash accounting is permitted. In practice most small traders simply add up their income, add up their expenditure, and include these two numbers on their Self Assessment tax return (SA100).
Subject to income tax and Class 2 and 4 National Insurance. The regime for deduction of expenses is the same as for corporate bodies. Sole traders must complete a Self Assessment tax return (SA100).
- Easy and cheap to start – just register with HMRC
- Tax regime is easy to negotiate and reasonably benign
- No audit or any kind of external verification of accounts is ever required
- No limited liability
- Any social goal is not reflected in the operating structure
- No social investment routes available
- Difficult to involve other people without becoming an employer and being their boss
- Accounts preparation – although you can probably do it yourself
- Payroll (if employing people)
- VAT advice, if necessary
- Book-keeping, if required