Trading As A Sole Trader

Looking For A Quick, Cheap & Simple Way To Start A Business?
Starting As A Sole Trader Might Be The Answer.

OnTax Accountant In Dunfermline Discuss:


Sole Trader

As an Accountant In Dunfermline I often meet people  that are fed up working for someone else 9 to 5.

Perhaps this is you? Maybe you think you can do a better job than what they are doing or perhaps you are just fed up of living the typical 9 to 5 life.

If so, becoming a sole trader just might be the solution you are looking for. As an accountant in Dunfermline my aim is to help you make this decision.

An Overview Of Being A Sole Trader

Being Your Own Boss

If you want to be in control of what you do and how you operate your business then becoming a sole trader helps you do this. You will be in charge of making all the business decisions and you don’t have to answer to anyone else!

This will allow you to run the business the way you pictured it without any interference from anyone else. If you are looking for flexibility then becoming a sole trader can address this as you choose what hours you work.


The Dream

It really is as simple as focusing on your trade whilst leaving all the numbers and tax work to your designated accountant in Dunfermline.

The deep feeling of achievement that comes from being your own boss cannot be expressed in words. It has many upside but comes with risks that must be weighed up. You need to be realistic about your capabilities and projections

Risks & Rewards Of A Sole Trader


How Do You Register As A Sole Trader?

Info Required

You may well be aware that you need to register with HMRC, but what does this entail?

Well, all that you need to do to become a sole trader is provide  your preferred accountant in Dunfermline us with some basic personal information such as your name, date of birth, national insurance number, address along with the date you want to register from.

Thats it! It really is that simple.


We will then register you with HMRC for self assessment.

Do be aware that once you commence as a sole trader it is important to get registered with HMRC straight away as they tend to like issuing fines for failure to do this.

Someone needs to pay for their office party, but make sure it's not you!


You should then receive a personal UTR number (UTR stands for "Unique Tax Reference") in the post from HMRC.

This number will stay with you for life and so you need to keep a permanent note of it somewhere.

You need to pass this number on to your assigned accountant in Dunfermline as they will need this when it comes to submitting your personal tax return.


When you are registered as ‘self-employed’ you will then be required to produce a personal tax return each year and submit it to HMRC.

This will allow HMRC to ensure that you will pay the appropriate level of income tax and national insurance based on your income and profits from your business.

Another obligation you have is to pay class 2 national insurance.

Positive Thoughts About Self Employment

"When All You Have To Fear Is Fear Itself, It's Time To Feel The Fear - And Do It Anyway!"

OnTax Accountants Ltd

"Being Your Own Boss Is The First Step Towards A Brighter Future"

OnTax Accountants Ltd

"Often The Key To Personal Happiness Is In Being Master Of Your Own Destiny"

OnTax Accountants Ltd

"Half The Battle is In The Mind - The Rest Is Opportunity You Create"

OnTax Accountants Ltd

Commitments Of A Sole Trader

If you don’t like commitment then fear not as there is little you are required to do when you are a sole trader. One thing you will be required to do though is submit a tax return once a year. This is something your appointed accountant in Dunfermline (i.e us!) can help you with.

This will consist of your earnings and expenses so all you need to do is hand us the relevant information and we will take care of the rest. You should retain all of your paperwork but it is not likely that there will be a great deal of paperwork involved.

How Much Tax Will I Pay?

How much tax you will pay is likely to be a major topic when it comes to you deciding if you would like to be a sole trader, after all the less money you have to pay to the tax man the better!

How much tax you pay will be worked out on how much profit you make for the year. As an accountant in Dunfermline I am well placed to be able to project and further advise on this.

The reason sole traders can end up paying a lot of tax is due to the fact that you will pay income tax on all of your profit made, whether you leave the money in the business bank account or not.

A limited company though can leave funds sitting in its bank account with you personally only being taxed on what is taken out of the business.

Beware The Tax Trap!

Therefore, you may need to consider if a limited company is a better option for you. This is something your accountant in Dunfermline can help, advise and assist on.

As a sole trader, you will pay income tax on taxable profits of the business as well as class 2 along with class 4 national insurance on the taxable profits.

On top of this, the taxman will ask for “payments on account” which is essentially advance payment of next years tax bill! There are ways to avoid this, further information can be given on request.

Go Make Your Dream Reality!

As An Accountant In Dunfermline, We Are Your Business Cheerleader, Willing You To Succeed...

30 Years Commercial & Accounting Experience. Having run multiple business ventures I can provide you with advice that will save you fortunes and help ensure your success!

Sole Trader Advantages

Simple Setup

You will be glad to know that there is not much extra work you need to do when you are a sole trader apart from keep a record of your sales and expenses.

If you are looking for an option that is low maintenance then being a sole trader is the way to go. Almost every accountant in Dunfermline deals with sole traders and will verify that this route really is a low maintenance route.

Something which might also interest you is that you will be able to claim tax relief on all business expenses and business purchases.

Simplified Registration

There is also no need to for you to register with companies’ house like you would have to do if you were a company, therefore you are saving on the registration fee and the hassle involved in registering.

This also results in there being little paperwork involved and therefore little bookkeeping needs to be done.

No Need To File Accounts

You are not required to submit a set of accounts when you are a sole trader, this is a big advantage as it means that there is not as much work for you to do and therefore you will be saving time and money without having to prepare accounts. Although you should still keep good records of your paperwork as these will still be required when it comes to submitting your tax return at the end of the tax year.


Although it's advisable to have a separate bank account for your trade, it is not a legal requirement.

If you are vat registered though almost every accountant in Dunfermline will advise you to have a separate account in order to isolate business transactions from personal ones.

Less Regulation

When you trade as a sole trader there are not as many restrictions on you as the sector is less regulated. This means that you have the ability to run your business exactly the way you would like to as there are not rules you must comply with.

You don’t have to make business decisions based on fitting in with rules and regulations, so that is one less thing to worry about! You will also have full control of your business when you are a sole trader this means all the decisions can be made by yourself without other people having their say. Ultimately, you can do things that suit you and you don’t need to compromise to please anyone else.

All in all, operating as a sole trader is the cheapest and quickest route to market, great for starting up and testing an idea to see if it will work.

Hi! I'm Rick, a sole trader

OnTax help me with my sole trader tax:

  • My books are quickly and efficiently dealt with

  • I get quick responses to questions

  • I pay less tax than if I did my own tax return


Sole Trader Dis-Advantages


When you are a sole trader there is a certain level of risk involved as you have unlimited liability. You can be held liable for any debts that may occur and therefore your personal possessions can be taken in order to clear your debt, this includes your house and your car. As an accountant in Dunfermline we have unfortunately witnessed this happening to local traders so consider your options carefully.

This is because when you operate as a sole trader you personally are the business, there is nothing separating you as a separate legal entity.


It can also be harder for you to obtain business finance such as loans when you are a sole trader, it can be seen as riskier to lend to a sole trader than to a business. This might be an inconvenience when you are looking for some extra money to help you start running your business.

Further, you will pay tax on all business profits as opposed to when you trade as a one man limited company and only pay tax on the money you take from the company.

Many Hats

Another thing to think about is lets say you are a joiner. You understand everything there is to being a joiner. You wear a "joiners hat" so to speak.

But as an accountant in dunfermline we see something else happening, it's so subtle you may not even notice what is really happening.

What I am referring to is that when you become self employed as a sole trader suddenly you are faced with wearing "many hats", a barage of new things to deal with; websites, marketing, finance, cashflow, liasing with an accountant, on and so forth.

This may not be what you envisaged at first but it is the reality of being a sole trader.

The Perception Of A Professional Image

Being a sole trader might not give as professional an image as it does when you have a company. This can put some people off from choosing you to do work for them. Some larger firms are known to only deal with limited companies and won’t even consider dealing with a sole trader.

One accountant in Dunfermline that we know of will only deal with individuals trading through limited companies, such is his passion for protecting his clients! Coupled with spin-off positive marketing aspects do seriously consider whether being a sole trader is better for you than being a limited company.

Summary Of Whether Being A Sole Trader Is For You

The Pro's

If you feel you are stuck in a rut and you feel that you are ready to change your life for the better and the thought of working for yourself, where no one else can dictate to you what jobs you are to do and how you are to do them, sounds like a dream then becoming a sole trader could very well be the leap you need to take.

You will be in control of your work/life balance and you can create a work life that fits in with your social life.

The Cons

You will need help, advice and support. There will be a massive impact on your life and at first things may be very difficult.

At times you may feel out of your depth and don't know where to turn for advice. Finances may well suffer, and possibly it could all go horribly wrong if you have not thought the whole matter through or lack the commitment to see it through.

A Balanced View

From the points made above you can see that trading as a sole trader doesn’t have to mean lots of extra work has to be done as there is not much extra work for you to do apart from keeping all of your paperwork.

Working for yourself with little extra work required apart from your trade definitely sounds like a dream come true to many. When you want to make the leap, we are here waiting to be your preferred accountant in Dunfermline.

Need Sole Trader Advice?

Frequently Asked Questions