Sole Trader
Glossary
Sole Trader
A sole trader is an individual who runs an unincorporated UK business in their own name, with no legal separation between the business and the person.
Sole traders pay Income Tax and Class 2/4 National Insurance on their profits through Self Assessment. There's no company to register at Companies House, no annual accounts to file publicly, and setup is essentially free. The trade-off: unlimited personal liability — your personal assets are on the line if the business fails. Most growing businesses incorporate once profits, risk, or external investment make limited liability worthwhile.
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