If you plan to operate as a sole trader, you must register as a self-employed with HMRC. This is really quick and easy to do and doesn’t involve Companies House.
As a sole trader you will be running a business as a self-employed person so you will have to register for Self-Assessment. This means you will be responsible for paying Income Tax and National Insurance Contributions (NICs) to HMRC. You must also prepare and file a Self-Assessment tax return each year.
The major difference between a sole trader and working through a limited company is that there will be no legal distinction between you and your business, in terms of finances and liabilities; therefore, you can keep all business profits after the deduction of tax but your assets are at risk if you fall into unmanageable debt. You will be fully liable.
The term sole trader just means that one individual is responsible for the business but that sole trader can employ people without having to form any other kind of business entity. If you do decide to employ someone you will need to register for PAYE. This can be done easily online. There are lots of organisations that will run your payroll for you for a few pounds a month or you can do it yourself. Online accounting packages give you low-rate options to keep your financial information up to date as well as prepare your end of year accounts.
The rules of self-assessment and filing deadlines are explained on gov.uk but the following information offers an overview
You must register as self-employed by the end of the October after the first tax year you have traded in. For example, you started trading on 07/05/2016. Your first tax year will end 05/04/2017. Therefore you must register as self-employed by 31/10/2017.
Working on the above example, your first self-assessment return must be filed by 31/01/2018. You will then be notified of the date by which you need to pay that first bill.
After this you will have two filing dates each year for submissions and payments.
HMRC now offer full services for filing online. It is our recommendation that you set this up as soon as possible. Don’t wait until January - fines for late filing can eat into your profit margins very quickly.
There is no official register for a sole trader business and there is no true way to know for certain that your business name is unique. Always do a quick check on Companies house though. If your chosen trading name is the same as existing limited company you could be opening yourself up to dispute. If the name you wish to use is available, you may choose to register this as a company to prevent someone else using it. This can remain dormant until you want to trade with it later or you may just wish to protect the name. Using an agent like Simple Formations, you can register a new company in just a few hours.