Registration of Sole Trader in the UK
Registration of a sole trader in the United Kingdom is one way to legalize one's business in this country. Regardless of whether a local resident or a foreign citizen plans to do this, the process of registering entrepreneurial activity involves several key stages and requirements. Proper registration ensures the legality of the business, opens access to various business opportunities and state support, and also helps avoid potential legal problems in the future.
In the case of sole proprietorship, an individual can keep all the profit from their business (excluding tax payments). They also bear personal responsibility for any losses incurred by the business.
Cases when it is necessary to register as a sole trader:
- if income exceeds £1000 (for self-employment) in the period from April 6, 2023, to April 5, 2024;
- if it is necessary to provide evidence of self-employment, for example, to qualify for Tax-Free Childcare;
- if you wish to make voluntary payments for National Insurance Class 2 to qualify for benefits.
How to register as a sole trader?
To register as a sole trader, you need to register "for Self Assessment." This is a special form for registering sole traders, which can be done with one of these documents:
- British citizen's passport;
- driver's license;
- credit reference.
If you are already registered "for Self Assessment" for another reason (for example, to receive a pension), you still need to fill out the form as a sole trader. This way, you can pay National Insurance Class 2 contributions and qualify for benefits in the future.
Important. Registration must be done within the first year of trading; otherwise, it will be illegal.
Responsibilities when operating as a sole trader
After registering as a sole trader, you will need to adhere to certain obligations:
- maintain business documentation and expense records;
- submit a tax return annually;
- pay income tax on profits and National Insurance contributions. An HMRC calculator can help you calculate everything accurately;
- when moving to the UK to start a business, you need to apply for a National Insurance number;
- if turnover exceeds £90,000, you must register the business for VAT. Also, if necessary, you can voluntarily register for VAT;
- in the construction industry, if you work as a contractor or subcontractor, you need to register with HMRC under the Construction Industry Scheme (CIS).
Business Name
An individual can register their business under their own name or choose another name. Your name and the business name (if applicable) must be indicated on official documents such as invoices and letters, but registration of these names is not mandatory. When approving a business name, pay attention to the following:
- the name cannot contain words such as "limited," "Ltd," "limited liability partnership," "LLP," "public limited company," or "plc";
- the name cannot contain rude/offensive words;
- permission must be obtained if the name includes a "sensitive" word or expression or indicates a connection to the government or local authorities;
- if the name is already registered or has been registered as a trademark by another owner, its use is prohibited, and this owner can take legal action for copyright infringement.
When registering a business in foreign countries, there are always many questions regarding legislation, so it is worth familiarizing yourself with all the nuances in advance. Experts working on the legal marketplace "Consultant" can help correctly draw up all the necessary documents and forms, which will reduce the risk of errors when submitting an application. In addition, a lawyer can provide advice on tax obligations, licenses, and permits necessary for the business, as well as help avoid potential legal problems in the future. With professional legal assistance, the registration process will become more understandable and safe, allowing you to focus on developing your business.
