Forming A Sole Trader Company
While sole trader companies are the easiest in the UK to start, there are a few legal requirements that must be met before you can actually begin trading as a sole trader. If you plan to trade under a different name than your own legal or personal name, then you are required to display your name, or the name of the business owner, as well as a legal address where documents will be served. These names and addresses must be displayed on your business stationary as well as any business cards or signs that pertain to your new company.
You are not required to register a sole trader business name with Companies House. However, you are permitted to file your name with the National Business Register if you want to do so. You should be careful that you are choosing a name that is relevant to your business and that is permitted to be registered. If you are using your personal or legal name, then you should have no difficulties in registering that name. If, however, you are choosing a business name that is not your personal name, then there are a few requirements that must be met in order for that name to be used legally for business purposes. You can learn more about choosing a name on the Companies House website. Again, sole traders are not required to file for business name registration through Companies House, but you can check the requirements for legal business names to get a better idea of how to select a name if you are not using your personal name as your business name.
If you are still unsure of whether or not your chosen business name will be allowed, you can contact a solicitor to help you with this process. A solicitor can perform certain checks to see if your name is being used elsewhere or would otherwise cause an issue with registration. The solicitor can also register your company name for you with the National Business Register which will help to ensure that no one else uses that name in the future or passes your own business name off as their business name.
Once you have chosen to operate as a sole trader, you are required to alert HMRC that you will now be self-employed. This registration is mandatory for sole traders and all other business entities. You have three months from the start of your trading to register as self-employed with HMRC. You can do this on their official website or call them and register by phone. Note that if you do not register as self-employed within the allotted time frame, you could incur a penalty of up to £100 for not meeting this legal requirement. The registration process is quick and easy, and it is recommended that you do this as soon as possible once you have decided to open a new business as a sole trader. Once this is done, you are free to begin trading under your new business name.