Being a sole trader is the most popular way to start a business. By definition, it means anyone who runs a business as an individual. A sole trader owns 100% of the business rather than a part of it. If you start a business with one other person, you are not a sole trader but a partnership. However, you do still fall under this category if you subsequently employ others.
A form of self-employment, there are currently around 2.8 million Sole Traders in the UK. If you’re one of these 2.8 million, you will be taxed under the self-assessment tax rules. When starting any business, a sole trader must register with the HMRC. You must then fill in a self-assessment tax form every year.
If a business has an annual turn-over exceeding £82,000, you must register for Value Added Tax.
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