Overview of Sole Trader Business Structure
A sole trader business structure is relatively inexpensive and easy to set up. You can trade using your own name or a branded name fitting your business. When deciding on a business name, you have flexibility. You will need to avoid offensive names or duplication.
Responsibilities and Transition
Sole traders take on all business risks with unlimited liability. Personal assets like houses could be sold to pay business debts. Legally, sole traders are responsible for all aspects including losses. However, you can still hire employees. Many tradespeople operate as sole traders.
Registering as a Sole Trader
Using your name, email, and password, create an online Government Gateway account. You’ll receive a user ID to log into your account. Here, register as a sole trader. Registering a business name isn’t compulsory. If trading under a different name, obtain rights to use it.
Restrictions and Growth
Sole traders can’t use terms like "Limited" in their name. This would mislead around legal status. Your name also can’t suggest government connection or be offensive. As the business grows, many sole traders switch to a limited company structure.
Conclusion
Setting up as a sole trader is common for tradies starting a business – over 72% use this structure. You own and manage the business as a single entity, taking on all risks. But you can still hire employees.