How to become a sole trader
If you are absolutely certain that your business will remain small at least for the medium term, and you are not likely to incur a lot of debt, then becoming a sole trader could be the route for you. If everything goes wrong and business growth isn't happening, the worst outcome would be a small amount of debt. This is something to consider carefully. If you know that the venture will stay small and provide another income (and no more than that), you should think about registering as a sole trader.
Good things about becoming a sole trader
There are some immediate benefits. Firstly, you won't be setting yourself up as a Limited Company, and therefore don't have to register with Companies House.
This makes the set up very easy and cost effective. When things change and your business clearly needs to employ people, you can always set up the Limited Company later on.
You do have to register your sole trader status with HMRC, because if your business starts to operate without doing so, you will face a fine and have to pay the tax you have incurred over time. This kind of thing can ruin any sole trader set up, because you are personally liable, and have to pay the debt.
Basically, it takes little time to set up, is virtually cost free, and still gives you room to grow your business.
What if I have a job?
It is actually very sensible with a small venture to keep a job at the same time so that you can take an income and provide for your family etc. However, you will have to register your status with HMRC. They need to know if you have a job and other income alongside that.
What you need to register as a sole trader
It is simple to register, and just requires you to have some items of paperwork ready. And you can do it all online.
Details you will need:
Your name
Date of birth
Address
National insurance number
Phone number
Date you started trading
Type of business
There is also a telephone number that will allow you to contact HMRC directly and set up your business. Call the 'Newly Self Employed Helpline' on: 0300 200 3504.
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