Becoming a sole trader is the simplest way to start working for yourself in the UK. There is no formal registration of the business itself, but there are things you must do. This guide is general information, so check GOV.UK for the latest rules.
1. Decide what you will do and who for
Know your service or product, your customers and your rough pricing. Write down what you expect to earn and spend in the first year.
2. Choose a name
You can trade under your own name or a business name. A business name cannot include “limited”, “ltd” or “plc”, and cannot be misleading or offensive. Check it is not already used and does not infringe a trademark.
3. Register with HMRC
You must register for Self Assessment by 5 October after the end of the tax year in which you started trading. You will receive a Unique Taxpayer Reference. Registering sooner is better, because it removes any risk of missing the deadline.
4. Open a business bank account
It is not a legal requirement for a sole trader, but it makes your records and tax much simpler. See why a separate account matters.
5. Set up your records
Record every sale and cost, and keep receipts. Choose software now, so that you do not have to rebuild your records later. If your income may pass HMRC’s threshold, learn about Making Tax Digital.
6. Sort out insurance and permissions
Depending on your work you may need public liability or professional indemnity insurance, a licence, or to register with a regulator. Check what applies to your trade.
7. Watch the VAT threshold
You must register for VAT if your taxable turnover goes over £90,000 in a rolling 12 months. Keep an eye on it. See our VAT registration guide.
8. Plan for tax
Set aside part of every payment for your tax bill. Use our tax calculator, and read the Self Assessment guide.
9. Get paid properly
Send clear invoices with payment terms. See our invoice guide.
How AvrioBooks helps
Create your business as a sole proprietor, explore the built-in demo company, send your first invoice and import your bank statement. Plans start at £12 a month, with a 30-day free trial. See AvrioBooks for sole traders and the help guide Create your business.
Frequently asked questions
Do I need to register as a sole trader?
There is no registration for the business itself, but you must register for Self Assessment with HMRC by 5 October after the end of the tax year in which you started trading.
Do I need a separate bank account?
It is not a legal requirement for sole traders, but it is strongly recommended because it keeps your records and tax clean.
When do I need to register for VAT?
When your taxable turnover goes over £90,000 in a rolling 12 months, or if you choose to register earlier.
Can I use a business name?
Yes, as long as it is not misleading or offensive and does not include limited, ltd or plc.
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