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sole trader

When starting a small business, one of the first things to be decided is the legal structure used for the business. It can either be a sole trader or limited company or a partnership. Setting up as a sole trader is the most popular legal structure in the UK, with approximately 3.2 million sole proprietorships in 2021. Sole traders accounted for 56% of small businesses in the UK. There were also 2 million limited companies, making it the second most popular legal structure.

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The sole trader business structure is the most popular in the UK. In 2021 there were approximately 3.2 million sole traders, accounting for 56% of small businesses. The sole trader structure has been popular due to its many advantages and the ease of setting up.

Sole trader business owners are known as self-employed and most freelancers opt for this structure of the business. There are both advantages and disadvantages of the sole trader business structure that need to be taken into account before making any business decisions.

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If you have started a business or are thinking about starting one, then you will need to decide on a business structure. You can choose to create a limited company, work as a sole trader or a partnership. Each business structure varies, especially when it comes to accounts and the bookkeeping. Sole trader owners are classed as self-employed, therefore they have their own set of tax rules and regulations to adhere to.

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If you work for yourself, there’s a strong chance you’re a sole trader. As a popular method of setting up a small business, sole traders make up almost 60 percent of all self-employed people in the UK.

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Reader’s question: I am a sole trader and have machinery worth £20k. If I transfer this to a Limited company by selling it to the company and setup as a director loan in the company, how do I treat this from a self-assessment point of view….do I pay CGT on the £20k?

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Once you’ve started up a new venture, you’ll need to ensure that you have banking facilities in place before you can start trading. So, do you need to set up a small business bank account for your business, or can you use your own personal bank account?

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The alternative to setting up a limited company is to become a sole trader or a member of a partnership, for example, if you decide to trade a sole trader you will essentially be classed as ‘self-employed’. In this guide on how to register as a sole trader, you will be made aware of all the relevant taxes, optional taxes you can register for and how to actuallly set up as a sole trader/ sel-employed.
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If you decide to become self-employed, either on your own (as a sole trader), or with other people (as a partnership), you will be responsible for working out and paying your tax liabilities to HMRC.

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Readers question: My wife and I are both independent sole traders. My wife is an artist and illustrator and I run a small cafe. My question is, how do we change from being independent sole traders to registering as one company so that we can trade as one entity as a limited company?

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When most people refer to a ‘company’, they usually mean a private limited company which has shareholders. However, there are several other types of company which all serve a different purpose. The types of limited company are the company limited by guarantee, a private company limited by shares, public limited companies and private unlimited company.
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There are a number of ways in which you can set up and run your business in the UK. In this guide created by OrangeGenie, we look at the differences between sole trader, partnership, Ltd and PLC. We will focus on explaining what the type of company is, the tax implications, and the advantages and disadvantages of each.
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When starting his first business, a friend told me how he decided to use his personal bank account for all of his business transactions. This included the income he generated from his clients, along with all business expenses.

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Starting your own business and taking the plunge can be daunting, but help is here. With this setup plan, you will feel equipped and ready to take your idea to the next level. From market research to financing your business, this guide contains six key points to help you start your own business.
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Reader’s question: I am about to start working for several companies as a self-employed transport consultant. Which would be better for me limited company or sole trader?

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Readers question: I want to open a cleaning company and hire a few people. I am finding it difficult to decide what is the best business structure for me, a limited company or a sole trader? Which would be the best, in terms of tax?

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If you are running a small business or a limited company with employees, you will need to get acquainted with a P60 form. Here, Dannielle Stapleton MAAT from Orange Genie brings you a guide to the P60 form, addressing what it is, when you would need one and where to get one.

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Readers question: I was wondering if I could get some advice about being self-employed and living abroad. I want to open a business account as a sole trader in the UK and pay my national insurance and pension to the UK. However, I live in Slovenia with temporary residency, as I am a British citizen. I live here as I got married to a Slovenian. I wanted to know how can I open as a sole trader as I work from home online teaching on a platform based in Asia. They just pay my salary nothing else. What would I have to pay to Slovenia as I live here and would I have to pay double social security? Or claim my benefits from the UK when I need them. Also, would I need a virtual office in the UK? My students, I just interact with them from the website the company provides.

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We all want to keep our businesses taxes as low as possible and one way is to claim all legitimate expenses.  But the general rule that says you can claim all expenses incurred wholly and exclusively for the purpose of your business is, sadly, not entirely straight forward.

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Readers questions: My partner and I have between us around 30,000 thousand pounds worth of tools/equipment as a sole trader, can we take them over to the ltd company or can the ltd company pay for them? We don’t want money out, we would like to offset our tax bill, can it be done?

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If you are classed as self-employed or have a source of untaxed income, you will be required to complete a Self-Assessment. However, this criteria is vague and many are left confused as to whether they actually need to file the tax return or not.

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