A sole trader business (being self-employed) is the most simple business type, as it is the easiest to set up and run. A sole trader is defined by the fact that one person is solely responsible for the business.
The business is set up under your name and you are entitled to keep all of the profit. But you're responsible for the tax owed along with the debts incurred by the business. In essence, as a sole trader you are the business.
- Cheap and simple to operate
- You don’t have to worry about paying yourself a salary
- You don't have to deal with Companies House, just HMRC
- Easy to set up and close down
- You are personally liable for the debts of the business
- If your profits are over £20,000 it can be less tax efficient
- Customers, suppliers & competitors will see you're a small business