Sole Trader & Partnership Setup
Not every business needs to be a limited company. For many self-employed professionals, operating as a sole trader or within a partnership is the simplest and most tax-efficient starting point. Our London accountants help you register correctly with HMRC, understand your obligations, and choose the structure that genuinely fits the way you work.
Sole trader vs limited company
A sole trader is an individual who runs their own business as a self-employed person. The business and the individual are the same legal entity, which means setup is quick and record-keeping is lighter — but personal liability is unlimited. A partnership is similar but involves two or more people sharing profits and responsibility.
Whether a sole trader structure is right for you depends on your income level, your appetite for risk, and your long-term plans. As profits grow, incorporation can become more tax-efficient. We talk through the trade-offs in plain English so you can decide with confidence rather than guesswork.
What we handle for you
We register you with HMRC for Self Assessment, obtain your Unique Taxpayer Reference (UTR), and make sure your National Insurance position is correctly set up. If you are forming a partnership, we help you put a partnership agreement in place so that profit shares, responsibilities and exit arrangements are clear from the outset.
We also set up your cloud accounting software so your income and expenses are tracked from day one — making your annual Self Assessment return straightforward and stress-free when the time comes.
Staying compliant as a sole trader
Once registered, you must file a Self Assessment tax return each year, pay Income Tax and National Insurance on your profits, and keep records of your income and expenses for at least five years. We keep you on track with reminders and support throughout the year, not just at filing time.
Frequently Asked Questions
When do I need to register as a sole trader?
You must register with HMRC by 5 October in your business’s second tax year at the latest, but we recommend registering as soon as you start trading.
Is being a sole trader cheaper than a limited company?
It can be at lower profit levels because there is less administration, but as profits rise a limited company is often more tax-efficient. We will advise on what suits your numbers.
Do I need a partnership agreement?
It is strongly recommended. A written agreement clarifies profit shares, responsibilities and what happens if a partner leaves, helping to avoid costly disputes later.
Will I need to register for VAT?
Only if your turnover exceeds the VAT threshold, or you choose to register voluntarily. We will tell you when registration becomes necessary.