Legal Responsibilities For A Sole Trader

Sole traders must register with HM Revenue and Customs (HMRC) and follow certain rules on running and naming their business.

If you’re a sole trader, you run your own business as an individual and are self-employed.

You can take on staff - being a sole trader means you’re responsible for the business, not that you have to work alone.

Your responsibilities

You’re responsible for:

  • keeping records of your business’s sales and expenses
  • sending a Self Assessment tax return every year
  • paying Income Tax on your profits and Class 2 and Class 4 National Insurance - use HMRC’s calculator to help you budget for this
  • your business debts
  • bills for anything you buy for your business
  • registering for VAT if your turnover reaches the VAT threshold
  • registering with the Construction Industry Scheme (CIS) if you’re a contractor or sub-contractor in the construction industry

Naming your business

You can use your own name or trade under a business name - read the rules for naming your business.

You must include your own name and business name (if you have one) on any official paperwork, like invoices and letters.

Date last updated: 04/06/2015