What are the Benefits of Setting Up as a Sole Trader in the UK

 

When choosing a jurisdiction for doing business, entrepreneurs most often decide to register a company in the UK. And this choice is supported by a lot of factors. In this article, we will discuss the advantages of setting up as a sole trader.

Advantages of Running a Business in the UK

English legal law prevails in the international system. It has been verified for centuries and greatly simplifies the workflow. Businessmen do not need a lot of paperwork, since any agreement can be officially concluded here and now by writing the main provisions, for example, on a napkin in a restaurant.

  1. It is permissible to register a legal entity online. The process takes no more than a day and is relatively cheap. In the same way, you can open a current account in any financial institution.
  2. Working with banking structures is simplified as much as possible. Each operation does not require a pile of papers and confirmations.
  3. Loyal system of taxation. Entrepreneurs can easily optimize the tax base.
  4. The investment segment in the UK is very well developed and a company from any field can easily find a suitable source of additional financing.
  5. Extensive state support is available to absolutely anyone. In the UK, it will not be difficult to get a soft loan, a development grant, or an impressive cashback.
  6. International business is easy to manage. The geographical location of England allows businessmen to be in time for meetings in Europe, and the USA and at the same time control the work of the team, for example, in Asia.
  7. English companies are highly trusted all over the world. The countries of the Asian region and the European Union willingly cooperate with them.
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Being a Sole Trader is Easier Than Being a Limited Company

The easiest way to start your own business in the UK is to register as a sole trader. The founder, solely managing the business, is responsible for all the debts and obligations of the company. In order to be allowed to set up this type of business, a foreign person must take out an insurance policy and register for self-taxation with HM Revenue and Customs (HMRC).

If you decide to work for yourself and create your own business, this can be done in two ways: you can set up a sole trader or create a private limited company.

As a sole trader you will be required to:

  • register as a self-employed and get UTR (Unique Taxpayer Reference);
  • keep all documents confirming the costs associated with the business;
  • send every year tax return, regardless of whether there was income and activity was carried out or not;
  • pay income tax and NI (Class 2 and Class 4 Insurance) payments;
  • pay all bills related to your business;
  • register for VAT if the annual turnover is £85,000 or more;
  • register for the Construction Industry Scheme (CIS) if you will work in the construction industry as a contractor or as a sub-contractor;
  • register as a PAYE employer if you plan to hire staff.

Registering as a sole trader provides certain business benefits:

  • fast registration procedure; 
  • simplified reporting;
  • no need to open a separate bank account. 

At the same time, you can work independently, hire staff, and also create partnerships (ordinary business partnerships).

But there is also a minus – a sole trader is responsible for its debts with all its property. Unlike a company, when you are only liable for debts in the amount of shares. If for some reason you want to stop the activity, it must be done officially.

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The Hoxton Mix offers reputable company formation services 

It is quite difficult to register a company in the UK on your own, as the procedure has a lot of pitfalls. Entrepreneurs face the first difficulties when choosing a company name. It is selected according to strict rules and checked for the presence of similar names in the registry. It is almost impossible to do this on your own without mistakes – quite often applications with company names that only remotely resemble existing legal entities are rejected.

There are other difficulties worth noting:

  • ignorance of legal subtleties and peculiarities;
  • problems with choosing the most beneficial organizational and legal form for a particular field of activity – there are quite a lot of them and it is difficult to figure out among the forms available to foreigners without the help of professionals;
  • search for real estate for an office – it is quite expensive and in order to choose the best option you need to have an information base and ideas about the most suitable places for commercial activity; in the case of a virtual office you are also recommended to consult with professionals and order the service; 
  • hiring employees;
  • opening a bank account – the procedure itself is relatively simple, but it is impossible to do a comprehensive analysis of the banking sector without the help of an expert.

To open a company in the UK, you need deep knowledge in the legal sphere, the economic segment, and other areas. Therefore, it is not advisable to initiate the procedure on your own – The Hoxton Mix experts with experience in such cases will resolve any issues by taking into account the needs of the client and relying on impressive experience in doing business in this segment.

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Conclusion

The UK is a great place to start a business, which is why many people move here for this purpose. Starting a business in the UK is easy, fast, and fairly inexpensive. The ground rules, guidelines, and resources apply almost equally to all companies, both traditional and online, that provide services rather than sell products. The sole trader business model is one of the most popular in the UK. It is ideal for business start-ups, and small businesses and is suitable for start-ups in the service sector: beauty salons, photography, etc. However, a sole trader is responsible for everything that happens to his business, and in the event of a huge debt or lawsuit, he can pay with personal savings and property.

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