Considerations for Sole Traders
- A sole trader business can trade using their own name or create a business name.
- When starting a business as a sole trader in the UK, choosing an effective business name is important.
- Avoid future problems by not choosing a name too similar to existing companies.
Sole Trader Business Name
- What business name can I use as a sole trader?
- Can a sole trader have any name?
Important Points for Sole Traders
- Sole traders take on all risks of starting their own business.
- Accounting services help with financial reports.
- If you earned over £1,000, register as a sole trader with HMRC by October 5th after becoming self-employed or risk being fined.
A sole trader is legally responsible for all aspects of the business, including profits and losses. This makes accurate and timely accounting important. Many tradespeople operate their businesses as a sole trader. As a sole trader, the individual must register with HMRC. Sole traders rely on marketing to make sales. A branded business name helps with recognition and professionalism.
You can legally use your personal bank account for both business and personal transactions. Or you can set up a second personal account to use for your business. Using your own name or a branded business name you have created, you will need to include this as a ‘Trading As’ name within official documentation.
Trademarking your sole trader name means that your chosen name is unique to your business alone. While this step isn’t mandatory, it’s recommended if you want to avoid having your sole trader name used by other businesses. Registering as a sole trader does not register or protect your business name but it can be protected using other methods.
People can trade under their own name or choose another business name. Names cannot include "limited" or be offensive. If your business makes over £85,000, register for VAT with HMRC. As your business grows, you may need to change your legal name. Notify tax authorities and agencies you registered with originally.
Sole traders and limited companies have different tax requirements, pros and cons. Sole traders are run by individuals and are personally liable. Limited companies are separate legal entities. To set up, choose a business name, register with HMRC, and acquire necessary licenses. Transferring your business name involves registering it with the new ABN.