Ascentant Blog
Setting up a business – Sole Trader FAQS
Sole Trader FAQS

What you need to know before setting up your own business as a Sole Trader.

We receive a number of questions from clients here at Ascentant. Here Kevin Drew, Managing Director answers some of the common queries that new businesses ask before establishing a Sole Trader enterprise.

Q – What taxes are due for a sole trader company?

A – A sole trader will need to complete an annual self assessment tax return and pay tax/NI on profits. Payments on account may be required to pay tax twice a year in January and July depending on the amount due.

Q – Who do I need to register with?

A – You should register with HMRC for a UTR number when beginning self employment.


Q – How do I register my business name?

A – You cannot register a company name as a sole trader, however you can choose a trading name to trade under. You should check that you are not infringing on a trademark or passing off another named business.

Q – Who is liable in the event of a legal dispute?

A – In the event of a legal dispute, you will be sued personally unless you have suitable insurance. You and the business are the same legal entity.

Q – Can I obtain business finance?

A – If looking for a loan or business finance, you and the business are the same entity. You will therefore need to offer a personal guarantee against any business credit or finance.

Q – How can I pay myself?

A – You can withdraw profits from the business, but it is not classed as remuneration as you are not an employee.

Q – Can I claim expenses working from home?

A – You will be able to claim a deduction for mortgage interest, rates and light and heat if you have an office at home.

Q –What expenses can I claim?

A – You can claim capital allowances on the purchase of a computer, but mobile phones will be subject to a private usage adjustment. You will be able to claim tax relief on expenses incurred wholly and exclusively for business.

Q – How much will accountancy fees cost?

A – Generally a self assessment tax return will cost around £100+VAT and production of a set of financial statements or accounts in the region of £200 – £300.

Ascentant are Bookkeepers, Accountants and Business consultants. We are based in Derby with an office in London and have assisted many times in the setting up of a sole trader business.