Whether you’re new to the world of registering as a sole trader or you’ve been in business for years, there are a few basic steps you should follow. If you fail to register as a sole trader, you could be subject to fines from HMRC.
Choosing a name for a sole trader
Choosing a name for a sole trader can be a daunting task. It’s important to choose a name that makes the right impression. This can be accomplished by choosing a name that is genuinely unique and that’s well suited to your business. Similarly, you should be careful not to use any words or phrases that might be deemed offensive by potential customers.
One of the best things about starting your own business is the freedom to name your own company. However, if you decide to become a limited liability company, you can’t pick a name that’s the same as one already registered. You can, however, opt to register your business name with the National Business Register. This will inform you of any name-related issues.
In addition to choosing a name for a sole trader, you’ll need to register with HMRC. This can be done online. You might also consider getting a trade mark. These are not free, but they do give you additional protection.
Choosing between a sole trader and a limited company
Choosing between a sole trader and a limited company when registering your business is a key decision. The choice of which structure to set up depends on your personal circumstances and the growth of your business. Choosing a structure is important, as it can affect your profitability and the level of liability you face. Whether you decide to go it alone or incorporate your company will depend on your objectives, and should be discussed with a professional adviser.
Those who choose to start a business as a sole trader should consider their financial situation and the level of record-keeping they will need to maintain. The benefits of having a limited company include better tax incentives and more security around personal assets. But they also cost more to run than a sole trader.
Choosing a bank account for a sole trader
Choosing a bank account for a sole trader can be a difficult task. However, it’s definitely worth considering the options and benefits. You don’t want to end up with a bank account that doesn’t meet your business’ needs.
A lot of banks offer business checking accounts for sole traders. These accounts allow you to keep track of your business’ cash flow, which is useful for tax purposes. They also come with perks like business cheque books and telephone banking. In addition, many have a free business advice service, or a business bank manager. Some even offer bonuses like $300 on deposit of $2,000 or more in the first 30 days.
In addition to this, most banks will offer you 12-18 months of free banking, which can be especially helpful for a new business. You can also choose from a variety of interest rates, including 20x the national average.
Choosing a VAT number for a sole trader
Choosing a VAT number for a sole trader is a decision that most sole traders will make. The process is fairly simple, and there are a variety of benefits to obtaining a number.
The main benefit is that you will be able to claim back some of the VAT you pay on purchases. You can also get credit for VAT on your start-up costs. If you decide to use an online bookkeeping system, you can easily track your revenue and expenses.
If you’re looking for help in deciding on a VAT number, you can contact Oxford-based accountants. They can help you choose the right legal structure for your business and advise you on all aspects of running it. You may also decide to work through a limited company.
HMRC fines for not registering as a sole trader
HM Revenue & Customs can fine people who fail to register as a sole trader. The amount of fines depends on the reasons for non-registration. They are calculated as a percentage of the tax owed or the national insurance contributions (NIC) due. The penalties are generally between 30% and 100% of the tax owed.
Sole traders are required to pay their Income Tax on their business earnings through a self-assessment tax return. They also need to make sure that they keep accurate records of all expenses and profits. These records are needed for 5 years after the self-assessment deadline.
The tax year starts on 6 April and ends on 5 October. Sole traders must register with HMRC by this date. They can do this online or by phone. If they choose to do it online, they must enter a unique taxpayer reference. This identifies them to HMRC so they can process their Self-Assessment tax return.