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Setting up in business as a Sole trader PDF Print E-mail

This guide assumes that you have read our guide entitled "Introduction to setting up in business". If you haven't, please click here to read it now.  

As a sole trader, you can trade under your name or under a name other than your own. If you decide to trade under a name that is not your own, you have a general statutory duty to divulge ownership of the business and an effective address within Great Britain at which a document may be served upon you. It is therefore necessary to show your name on all letters, orders, invoices, receipts and written demands for payment. In addition it must be prominently displayed at all places in which the business is conducted, to which customers and suppliers have access. 

You have to register your self-employment with the Inland Register within 3 months of starting self-employment. If you fail to register on time, you could be liable for a penalty of £100. You can register by calling the Helpline for the Newly Self-Employed on 08459 15 45 15. Or you can fill in the form at the back of the Inland Revenue leaflet P/SE/1, "Thinking of working for yourself?" which can be dowloaded by clicking here. It is also available from the Self Assessment Orderline on 0845 9000 404.

You are also required to pay Class 2 National Insurance Contributions by a monthly direct debit or quarterly by cheque or cash at the post office from the date you start your self-employment. The current rate is 2.20 per week. You may be able to apply for exemption if you forecast that you will not make a profit in your first period of trading or your profit will be less than the exemption threshold. Please click here to see the current threshold. 

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