Establishing your own business is the best way to be your own boss, have control over your work-life balance, and enjoy flexible working hours. And the most basic type of business structure is the sole proprietorship. Due to the freedom and work choice, there are around 3.5 million sole traders in the UK that make 59% of the UK private sector business population. So, if you also want to be the one, you need to know how to register as sole trader. Continue reading this post to learn more!
Ways to Register as a Sole Trader?
To start your business, you are required to register it with HMRC first. You can do it by:
- Applying online and filling out the online form via the self-registration form.
- Sending the registration form via post to HMRC.
- Contacting HMRC on 0300 200 3310.
Information HMRC Needs for Registration
HMRC needs the following information to register your business (sole proprietorship):
- Postal address
- Telephone number
- National Insurance number
- Business name
- Nature of the work
- Starting date of the business
In addition, you also need to know that your business name should not include Ltd, LLP or plc. It should not contain sensitive words and expressions, it should not seem offensive and it needs to be a unique trademark.
When Should I Register?
The sooner you register, the better. However, you need to register before 5th October in your business’s second-year tax. If you register late, you don’t need to pay a penalty if you are sending your Self Assessment tax return and paying your tax bills on time. Keep in mind that a tax year starts from 6 April to 5 April the next year.
How Can I Register for Self Assessment?
As a self-employed person, you need to register for the Self-Assessment. You need to do so until 5th October of the second year of your business, otherwise, you might face a penalty.
Normally, the registration process takes around 10 working days for the people living in the UK. If you’re abroad, it might take around 21 days.
Efficient record management is the best way to keep your finances in order. Therefore you must need the help of an accountant in this regard. Contact us today!
What’s Going to Happen Next?
A Unique Taxpayer Reference number (UTR) will be provided to you after your business has been registered. Then, you’ll get an activation code for activating your Government Gateway Online Account. You will also get access to the Self Assessment service via your online account which will show your tax status.
Once you’re registered, you can start trading! But you need to know that there are a few responsibilities that you need to follow as a sole trader. These include:
- Registering for Self Assessment
- Choosing a business name
- Keeping financial records
- Sending annual tax returns
- Paying taxes
- Following VAT rules of HMRC
Quick Wrap Up
To sum up, you are now well aware of how to register as sole trader, what information you need to provide, how can you register for self-assessment and what are your legal responsibilities as a sole trader. Although setting up a sole proprietorship is easy, however, managing its finances can be complex, particularly sending tax returns after each tax year.
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Disclaimer: This blog is written for general information on how to register as a sole trader.