Going Solo? The Ultimate Sole Trader Starter Guide
Ryan Scott • 10 May 2025
This is a subtitle for your new post
Starting out as a sole trader can be an exciting step, but before diving in, it’s important to understand exactly what it involves. From legal responsibilities to financial obligations, there’s a lot to consider. At SBX Accountants, we break it all down so you can confidently manage your business and stay on top of your compliance.
Choosing the Right Business Structure
Deciding on the right legal structure is one of the first major decisions you’ll make. Your choice will depend on factors like expected earnings, the industry you’re in, and whether you’re going into business solo or with others.
It's not just about setup—it also affects your liability, how you’re taxed, and how much admin you’ll be responsible for. We’ve explored this in more detail in our blog: What Type of Legal Structure Should I Choose?.
Sole Trader vs Self-Employed – What’s the Difference?
While "self-employed" refers to anyone who runs their own business, it’s not a legal structure. You still need to formally register under a structure—like sole trader, partnership, or limited company.
As a sole trader, you are the business. This gives you full control and allows you to keep all your profits (after tax), but it also means you’re personally responsible for any business debts.
How to Register as a Sole Trader
You can register as a sole trader through your Government Gateway account—and if you don’t have one yet, it’s
quick to set up.
Your Key Responsibilities as a Sole Trader
Running a business as a sole trader comes with legal and financial duties, including:
• Keeping detailed and accurate business records
• Filing a
Self Assessment tax return each year
• Paying income tax and National Insurance on your profits
• Submitting
VAT returns if your turnover exceeds the threshold
Understanding Tax Obligations
As a sole trader, you’ll report your income through Self Assessment and pay tax on your profits. The amount you owe depends on how much you earn, so staying on top of your records is vital. It helps you forecast your tax bill and avoid surprises.
Need help planning your taxes? SBX Accountants can assist you with everything from filings to forecasting.
Why Bookkeeping Matters
Bookkeeping isn’t just a good habit—it’s legally required. It gives you a clear picture of how your business is performing and helps you avoid costly mistakes.
Bookkeeping means logging all income and expenses, including sales, invoices, receipts, wages, and more. With the rollout of Making Tax Digital for Income Tax, maintaining digital records will become even more critical.
To learn the essentials, see how we can help with your bookkeeping.
What Records Should Sole Traders Keep?
Even though you won’t submit records with your tax return, HMRC can ask for them at any time—so they need to be complete and accurate. You must keep records of:
• Sales and income (including receipts and invoices)
• Business-related expenses
• PAYE records (if you employ staff)
• VAT transactions (if registered)
Records must be stored for at least five years after the January 31 tax deadline for the relevant year.
Do I Need to Register for VAT?
If your taxable turnover exceeds £90,000 in a 12-month period, VAT registration is mandatory. Voluntary registration may also be beneficial in some cases—especially if you work with VAT-registered clients—but it depends on your circumstances.
We recommend speaking with
SBX Accountants to assess whether VAT registration is right for you.
What Business Expenses Can I Claim?
One of the benefits of being a sole trader is the ability to claim expenses that are "wholly and exclusively" for business use. Common examples include:
• Office supplies and equipment
• Business travel and mileage
• Marketing and advertising costs
• Professional fees and software subscriptions
• Phone and internet bills used for work
You’ll need to keep proof—like receipts or invoices—to back up any claims.
Need Support?
Whether you’re just starting or need help managing your sole trader account,
reach out and we can give you advice on your individual circumstances.
If you’re self-employed — whether as a contractor, freelancer, or running your own solo business — chances are you’ve come across the term IR35. It’s one of those bits of tax legislation that often confuses people and, at times, causes unnecessary worry. Let’s clear things up: IR35 doesn’t apply to sole traders. But that doesn’t mean there aren’t other important tax and compliance considerations. At SBX Accountants, we’re here to help self-employed individuals stay informed, compliant, and efficient — without the confusion .
The UK property market continues to evolve rapidly, presenting new challenges and opportunities for landlords. From stricter regulations to shifting tax policies and increasing costs, the buy-to-let sector is no longer the guaranteed win it once was. As we head deeper into 2025, it’s never been more crucial for landlords to partner with a dedicated property accountant who truly understands the complexities of property ownership, tax efficiency, and portfolio growth. At SBX Accountants , we specialise in helping landlords not only stay compliant but make smarter decisions with their investments. A Changing Property Landscape Owning rental property has long been viewed as a dependable way to build wealth — offering consistent income and long-term capital appreciation. The traditional belief was simple: buy property, hold onto it, and eventually reap the rewards either through rent or resale. But times have changed. With the rise in interest rates, removal of full mortgage interest relief, higher upfront taxes, and legislation like the upcoming Renters’ Reform Bill , landlords now face a far more complex and tightly regulated environment. Throw in rising maintenance costs and the increasing burden of digital reporting requirements, and it’s clear — this is no longer a hands-off investment. That’s where SBX Accountants steps in.
Tax codes play a vital role in the UK’s tax system, determining how much Income Tax is deducted from your wages or salary before it reaches your bank account. While they may seem like a confusing mix of numbers and letters, every element of a tax code has a specific purpose—and understanding yours is key to managing your income effectively. One of the most frequently used tax codes is 1257L. If you've spotted this code on your payslip or tax documents and are unsure what it means, SBX Accountants is here to help clarify how it affects your take-home pay, and when you might need to take action. What Does the 1257L Tax Code Mean? The 1257L tax code is currently the standard code for most employees in the UK. It reflects your entitlement to the Personal Allowance—the amount of income you can earn before paying Income Tax. "1257" indicates a tax-free allowance of £12,570 per year (1257 × 10). The "L" denotes that you’re entitled to the standard tax-free allowance with no deductions for benefits or previous underpayments. Your employer or pension provider uses this code to calculate how much tax to deduct through PAYE (Pay As You Earn), helping ensure the correct amount of tax is collected throughout the year.
