The Legal Requirements for a Sole Trader
A sole trader appears as an unincorporated business owned by a single person. As mentioned on the Bytestart website, acting as a sole trader offers the simplest method to begin a business because their are fewer administrative and accounting requirements when compared to limited companies.
However, sole traders must properly register the business to prevent fines, penalties and possible business closure.
Select a name for the business. Conduct a business name check. Sole traders must make certain that the business name isn't too similar to another registered business name. As mentioned on the Startup website, sole traders can check phone books, magazines and trade journals to avoid business name conflicts. Conduct a free business name check with the National Business Register, the Trade Marks Register and the Patent Office. In addition, sole traders should conduct a business name availability search with the index at Companies House, which lists the business names of registered limited companies. Register the business name with the National Business Register after all name availability checks have been completed. This will ensure another company won't be able to use the same business name.
Display the Name
Sole traders that use a business name other than the name of the owner must display the name and address of the owner on all business stationery, as explained by the Startups website. This requirement appears as a necessity so that legal documents can be served on the business premises of the sole trader. Business letterheads, business cards and store signage must be designed in accordance with this requirement.
Register with HMRC
Register with HM Revenue and Customs (HMRC). Sole traders must register as self-employed with the HMRC for tax purposes. Sole traders that fail to register within 3 months of starting a business will incur a fine. As explained on the Alpha Business Services website, the 3 month period begins on the last day of the first month of trading. Sole traders can register for self-employment taxes on the HMRC website.
Register for Value Added Tax (VAT). According to the Bytestart website, sole traders should register for VAT if taxable earnings in the past 12 months has exceeded 31751 Kilogram.Sole traders may register for VAT on a voluntary basis, even if taxable earnings fall below the 70,000 pound VAT threshold. Sole traders may register for VAT on the HMRC website.