We sort your Self Assessment for you. £149, all in.

Fast, effortless and 100% online.  Learn more

We sort your Self Assessment for you. £149, all in.

Setting up as a sole trader: frequent questions

  • 3 min read
  • Last updated 15 Nov 2022

We know that setting up as a sole trader can be confusing, that’s why we’re answering all of your questions. 

No need to thank us just yet! 😜

The self-employed brain

1. How do I know if I need to set up as a sole trader?

Simple! You’ll need to set up as a sole trader if:

  • You earned over £1,000 from self-employment in the past tax year
  • You need to prove that you’re self-employed, i.e to claim Tax-Free Childcare
  • You want to make voluntary National Insurance contributions so you can qualify for benefits and/or full state pension

2. Is self-employed the same as sole trader?

In short, yes:

  • Self-employed means that you do not work for an employer and you don’t pay tax through PAYE
  • Sole trader is the formal name for your self-employed business

They’re the same thing.

3. Can I be both employed and self-employed?

Yes! You can work for an employer as well as yourself. Let’s look at a quick example:

Nadia works for Starbucks full-time as well as running her small business. Nadia is employed and self-employed. 

Her Starbucks income is taxed through PAYE before it arrives in her bank account. But she’ll have to file a tax return for her self-employed income. 

PS: You’ll also have to work out how much tax you owe on your self-employed income by yourself. 

See more details about being both employed and self-employed here.

4. When do I need to register?

You can register after you’ve earned your first £1,000 from self-employment. The ‘hard deadline’ is 5th October of your second tax year.

You’ll have to pay your tax bill by 31st January (if you opt to file a paper tax return, the deadline is 31st October.)

If you earn less than £1,000 in the tax year, you don’t need to do a tax return.

5. Can I register in advance?

Yep, but only 28 days before you start your work (this is the limit).

6. Do I need to register every year?


If you have to send a tax return but did not send one last year, you need to re-register for Self Assessment and pay Class 2 National Insurance.

If, on the other hand, you’re looking to stop being a sole trader, you need to let HMRC know – otherwise, they’ll still expect a tax return. Find out more about how to stop being self-employed here.

7. How should I name my sole trader business?

You can trade under your own name, or you can choose another name. The choice is yours!

8. Do I also need to register for VAT?

You’ll need to register for VAT only if you meet any of the follow criteria:

  • Your turnover will be over £85,000 (the “VAT threshold”)
  • You sell to other VAT-registered businesses and want to reclaim VAT

Find out how to register for VAT here.

Need a hand filing your tax return? Let us help! 🙋
Our accredited accountants can sort your Self Assessment in as little as 48 hours, find out more here.

TaxScouts Newsletter

Want regular tips from us?

Sign up for important updates, deadline reminders and basic tax hacks sent straight to your inbox.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.