THE LAW SETTING UP YOUR BUSINESS
There are a number of ways of running a business, some of which will be more appropriate to your circumstances than others: SOLE TRADER
As a sole trader you have complete control over your business and accounting affairs and there are fewer administrative requirements because you are not creating another trading entity. You must register as self-employed with HM Revenue & Customs (HMRC) and more information on this can be found at the self- employed section of HMRC’s website:
www.hmrc.gov.uk/selfemployed /
index.shtml. If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than £68,000, or you expect it to go over that figure in the next 30 days, you must also register for VAT, which is explained in more
detail at the VAT section of HMRC’s website:
www.hmrc.gov.uk
/vat/start/register/
how-to-register.htm. You still need to pay tax but essentially you do so as an individual paying income tax on your profit (income less expenditure). As a sole trader you are under no obligation to disclose your accounts publicly.
You will be in the firing line personally for any debts of your business, which would not be the case if traded through a company.
It is possible to begin trading as a sole trader and subsequently to incorporate your business into a company.
You need no documentation to set yourself up as a sole trader. The steps to take
• Register as self-employed with HMRC; and • Register for VAT if your turnover exceeds £68,000 in the previous 12 months. The paperwork None required for establishment as a sole trader. PARTNERSHIP
If there are two or more of you in business together, then you will become a partnership as a matter of law. Therefore you could find yourself in a partnership without realising it and subject to lots of laws you may not be aware apply to you.
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THE LAW 18
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