Starting a business as a sole trader is a simple process. Register with HM Revenue & Customs as soon as you start trading as a sole trader. As a sole trader, you have complete responsibility for your business and finances, which also means that you have full liability if your business fails. However, a sole trader doesn’t have to deal with Companies House and accounting is relatively simple.
Although as a sole trader you are in business by yourself, you can still employ others. If you hire an employee, you can hire someone as a full or part time worker or even on a casual basis. You don’t automatically have to register as an employer unless certain conditions apply. If your employee has another job, state pension or an occupational pension you must register as you will have to deduct tax. If you are paying your employee over the threshold for PAYE, or paying at or above the limit for National Insurance Lower Earnings, you will have to register as an employer. If you pay employee benefits, you must also register.
As an employer you will have to decide which type of payroll system to use. HMRC will send you a PAYE reference number on a letter which will provide a link to guidance. When operating PAYE you have specified obligations for filing forms and returns online in a timely manner. As a sole trader, dealing with the administration as a result of becoming an employer can be burdensome, which is why expert help is advised.