In 2021, there were estimated to be 5.6million UK private businesses. Out of these, 3.2million (57%) were sole proprietors, also known as sole traders (source: FSB).

Sole traders are those who run their businesses on their own and are considered self-employed. And whilst it’s easier to set up than a limited company, you still need to register it. It’s the first step in presenting yourself as a legitimate business.

Here we explain the simple steps to registering as a sole trader.

Let’s start at the very beginning

By registering as a sole trader, you are effectively telling Her Majesty’s Revenue and Customs (HMRC) that you are becoming self-employed.

Being self-employed means you will have to tell HMRC what your revenue and expenses are at the end of the trading year. From this you calculate - and pay - the income tax and national insurance owing. You do this with HMRC’s online ‘Self Assessment’ system.

This is how you register:

1. Open your own personal tax account

This is an online account (also called the Government Gateway account) that let’s you view your tax details and manage your dealings with HMRC. To open an account:

• Go to HMRC’s website

• Click the green ‘Sign in’ button

• Click the ‘Create sign in details’ link

• Enter your email address where requested

You will then be emailed a confirmation code.

• Use it to confirm your email address

• Follow the online instructions entering the right information when prompted

You will then be issued with a User ID for your account.

• Next, pick which type of account you need. Select ‘individual’ for a sole trader

• Complete the details requested by HMRC for the type of account you’ve selected

• Signing into your tax account (using your Government Gateway User ID that you received when you first created your tax account)

• Add Self Assessment to your account