Figuring out what your business legally functions as can be tricky and leave you scratching your head. You may be a sole trader, a limited company, or a in a partnership.
If you work for yourself, you may be a sole trader. You may be acting as a sole trader if you:
- Take full responsibility for your business’s successes and failures
- Have multiple clients simultaneously
- Have the luxury of deciding where, when, and how you complete your work
- Can outsource jobs to other people to help with your workload
- Stock the main equipment needed to carry out your work
- Are responsible for completing unsatisfactory work within your leisure time
- Have a fixed price for your service
- Trade for financial profits
Specifically, a sole trader is defined as a self-employed person who are the only owners of their business. You are not a sole trader if you are employed by another person or run a business with another individual or group of individuals. The most common examples of sole traders are freelancers, tradesmen, and other small high street businesses.
If you are a sole trader, it is essential that you inform HM Revenue and Customs (HMRC) at the earliest possible time. You must also carry out an annual self-assessment of your earnings, so the correct amount of taxation is applied to your business.
If you need help with sole trader registration or compliance with HMRC please contact The Accountancy Solutions on 01216297768 or 02070784001 for further advice.