How do I register as a sole trader?

Sole traders, boy, have we got news for you? You too, have to pay taxes😭 But, unlike PAYE employees, you’ll have to declare your income to HMRC. 

(Ironic clap of thunder) ⚡

Oh, and don’t forget about your Sole Trader UTR number – you’ll need that to keep things running smoothly. But don’t worry, we’ve got you covered. ☂️ Here’s everything you need to know.

What is a sole trader? 

Sole trader is legal jargon for self-employed people in the UK. If you’re a sole trader, you’re responsible for owning, managing and all-round bossing your business. 

Here are some examples:

• Artists
• Builders
• Nail technicians
• Dance teachers
• Dog groomers

So, you’re bossing your own business. Or side hustlin’ your way to success. Congrats 👏

We hate to rain on your parade, but with great power comes great responsibility…

Do I have to register as a sole trader?

Yes, as a sole trader, you’ll need to register for Self Assessment. HMRC will want to keep track of your income and tax you accordingly.

As a sole trader, you’ll need to: 

Yikes! We hope you’re taking notes. 

When do I need to register as a sole trader?

You’ll need to register by 5th October. 🍂 We’d highlight, circle, and bookmark this one! 

The good news is, the registration process is straightforward. Particularly as you have us to guide you. 😉 You’ll only ever need to register once, and here’s what you need to do:

 How to register as a sole trader

1. Register online by creating an HMRC online account 💻
2. You’ll receive a user ID 🪪
3. Log back into the HMRC online account, select “add a tax”, and then “Self Assessment”
4. Select “Sole Trader” from the options: individual, sole trader, partnership, or trust
5. Enter the date you started your self-employment 📅
6. Submit more details, including your National Insurance Number (here’s how to get one)
7. Describe the work you do: “security guard”, “Uber driver”, “freelance designer”, etc. 🚗
8. Review and click “Submit” ✅

You’ll get a letter with your Unique Taxpayer Reference (UTR) number by post. After you get that letter, you’ll receive another one within 10 working days with a code to activate your sole trader UTR number.

You can also register using this form:

• Download it on HMRC’s website 📩
• Fill it in 📝
• Send it by post. Bish, bash, bosh 📬

It can take around 4 weeks to complete the Self Assessment registration process – so start ASAP! Future you will be grateful🙏

What is a sole trader UTR number and why do you need it?

When you register as a sole trader, HMRC will issue you a Unique Taxpayer Reference (UTR) number. This is a 10-digit number that’s used to identify you when dealing with HMRC.

Once you’ve registered for Self Assessment, you’ll receive your sole trader UTR number by post. It’s important to keep this number safe because you’ll need it for your tax returns, communications with HMRC, and much more. Without it, HMRC won’t be able to process your tax information. 🫠

Make sure you keep your sole trader UTR number handy and avoid losing it! If you ever misplace it, you can always request a new one from HMRC.

What information do I need to register for Self Assessment?

• Full name
• National Insurance number
• Current address (and date you moved in)
• Date of birth
• Phone number
• Email address

You’ll need this information so keep it to hand (or write it down on paper, we’re not fussy!).

If you stop being a sole trader, you’ll have to let HMRC know as soon as possible, otherwise, they’ll still expect you to file a Self Assessment tax return. 😱

Can you be VAT-registered as a sole trader?

Yes, as a sole trader, you can be VAT-registered if your taxable turnover exceeds the VAT registration threshold. If your income is below this threshold, you’re not required to register for VAT, but you can choose to do so voluntarily if you wish.

Once registered, you’ll need to charge VAT on your sales and can reclaim VAT on your business expenses.

Tell me more about your bookkeeping tools

Ah yes, we thought you might want to hear more. 😏 As a sole trader, you’ve got a lot to keep track of. Which is why we mentioned our free bookkeeping tools. 🫣

Our accounting overview allows you to track all your business income and expenses, all at once.

And, you can securely connect your bank account or credit cards to automate your finance management. 

But, that’s not all. Find out more here. 👇

And breathe

Woah. That was a lot to digest. 🥹 But, you’ve done it now! 

Register as a sole trader, get your sole trader UTR number, and the hard part is done. 🥵 And, you’re welcome back here anytime, for all the advice you need.