Sole trader If you start working for yourself, you’re classed as a self-employed sole trader - even if you’ve not yet told HM Revenue and Customs (HMRC).
As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them. You can employ staff. ‘Sole trader’ means you’re responsible for the business, not that you have to work alone.You’re personally responsible for any losses your business makes.
Tax responsibilities You must:
- send a Self Assessment tax return every year
- pay Income Tax on the profits your business makes
- pay National Insurance
- send a Self Assessment tax return every year
- pay Income Tax on the profits your business makes
- pay National Insurance
You’re personally responsible for any losses your business makes.
This is one condition which you would need to have a look. If you do some shoddy work and your client wants to recover the losses they can come after your personal money or property. LLPs have the same probelm too. And you pay NI and income tax on all of your profits.
If you have a partner then both can take out the profits of a limited company, if both are directors. The tax hit will be less as compared to a single person.
