How to set up as a sole trader

Sole traders account for a large proportion of UK businesses, and it’s usually the first step taken by new and smaller businesses until they outgrow sole trader status. Sole traders are classed as self-employed individuals who run a business. You would be personally responsible for the finances of your business, but all profits are yours to keep after paying tax. If you’re just starting, or your business has grown to the point where you need to register as a sole trader, here’s what to prepare and how to get it done.

What to prepare for sole trader set up

It’s worth noting that if you earn under £1000 from self-employment within a tax year, you’re not required to register with HMRC. You can save time during the application process by having everything ready and on-hand; here’s what to prepare:

Business name - it cannot include ‘limited, LTD, limited liability partnership, LLC, public limited company, PLC’ and mustn’t be the same as existing trademarks.
National insurance (NI) number - if you’ll be moving to the UK to set up your business and don’t currently have a NI number, you’ll need to apply for one beforehand.
Business address - you’ll need an address for correspondence with HMRC, and if you’re selling or contracting goods or services online, you may be legally required to show this address to your customers.
Date of birth.
Telephone number.
Email address.

Sole trader responsibilities

If you register as a sole trader, there are additional responsibilities to be aware of that are required by HMRC:

Keep records of all business sales and expenses.
If the business incurs any losses or debt, you will be personally liable.
You’ll need to register for self-assessment tax returns and complete them by the deadline, which is dependent on how you file your tax assessment.
Factor in any national insurance contributions your business will have to make. For up to date information on how much you can expect to pay, visit the government’s sole trader national insurance page.
Bookkeeping and PAYE if you’ll be employing someone.

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How to register as a sole trader

If you have everything prepared and registering as a sole trader makes sense for your business, you have multiple options for registering. It’s completely free to do, but be aware that you’ll be taking on additional responsibilities that, if not met, can result in fines.

Complete the online application via HMRC.
Print the application and send it to the postal address shown.
Call HMRC 0300 200 3310 and proceed through set up.

Addresses for sole traders

If you need an address when registering as a sole trader, for use on your website, or for email and stationery such as letterheads, you can either use your home address, your business’s office or a virtual address. Bear in mind that if you’re selling services online, you’ll be required to show a correspondence address to your customers. This doesn’t have to be the same address you used when setting up as a sole trader, but it may make sense to use the same address throughout your business’s operations.

A virtual address is suitable for use when registering as a sole trader, it’s cheaper than renting an office building, and they can be a great alternative to using a personal address on public channels. All of our address solutions come with a mail plan and access to our advanced mail management platform. When we receive any mail for your business, you’ll be notified via your account and have the option to read, store or destroy the item from any connected device. This solution saves businesses money in comparison to physical locations while providing a sound solution for company mail at the same time.

Is UK Postbox right for me?

As a sole trader, you’ll be required to provide HMRC with an address during the registration process. This will be used for correspondence and there is no restriction on what type of address you use, as long as it's a physical location. This means that a PO Box can't be used, and you should instead opt for a virtual business address or your home address. If you register your company in the future, there's benefits to having a virtual business address in place now to avoid future changes.

A virtual address is suitable for business correspondence, it’s cheaper than renting an office building, and by using one instead of your home address, you can protect your privacy. All of our address solutions come with a mail plan and access to our advanced mail management platform. When we receive any mail for your business, you’ll be notified via your account and have the option to read, store or destroy the item from any connected device. This solution saves businesses money in comparison to physical locations while providing a sound solution for company mail at the same time.

Virtual addresses for all business types

View our virtual address solutions for business use.