Q&A - What is a sole trader?

Most businesses in the UK are small businesses, owned and operated by one person. In most cases, these businesses operate as a “sole trader”.

Look through the Yellow Pages or a local free business listing posted through your letterbox and you will see lots of examples of people operating as a sole trader in your area.  Many traders in the service sector (e.g. hairdressers, gardeners, plumbers and electricians) use the sole trader option, as do people who run part-time or seasonal businesses.

Why is the sole trader such a popular form of business organisation?  The key reason – it is simple and cheap to set up and operate in this way.

Being a sole trader is the simplest way to run a business: it does not involve paying any company registration fees; keeping records and accounts is straightforward, and the sole trader gets to keep all the profits.

The sole trader simply registers as being “self-employed” with the UK tax authorities. The profits earned by a sole trader are included in the personal income of the business owner when it comes to calculating and paying income tax and national insurance.  Depending on the value of sales achieved, the sole trader may also have to account for VAT.

Revision Presentation - Measuring and Increasing Profit [17 May 2012]
Revision Presentation - Calculating and Measuring Profit [13 May 2012]
Takeovers and Mergers - the failed takeover behind Clinton Cards’ Collapse [9 May 2012]
VW targets growth markets [26 Feb 2012]
Advising on Legal Structure - Role Play [13 Feb 2012]
Private equity buyouts - Sunday Times supplement [5 Feb 2012]
The 7p Valentines Day Card [1 Feb 2012]
How to turn threats into an opportunity at Ryanair [31 Jan 2012]
Unlimited vs Limited Liability? Box it off [4 Jan 2012]
The Rise and Fall and Rise of Gerald Ratner [27 Nov 2011]
International operations decisions - Adidas trainers for $1? [26 Nov 2011]
Cut price cup cake deal goes wrong…... [22 Nov 2011]
Unilever hit by rising costs [6 Nov 2011]
Revision Quiz - Legal Structure Basics [15 Oct 2011]
Revision Quiz - Sole Traders and Partnerships [15 Oct 2011]
Revision Quiz - Limited Companies [15 Oct 2011]
Messy Contributions…. recipe for success? [29 Sep 2011]
Profits dive and put pressure on liquidity - the Distress Monitor [29 Sep 2011]
Revision Presentation - Risks and Rewards to Enterprise [7 Sep 2011]
Revision Presentation - Adding Value [7 Sep 2011]
Revision Presentation - What is a Business? [6 Sep 2011]
The puzzle of rising profits [5 Sep 2011]
Evan Davis ‘Made in Britain’ - and a new trade data tool to play with [21 Jun 2011]
400,000 British Businesses Disappear - Overnight [24 May 2011]
Q&A - What is a partnership? [1 May 2011]
Partners in profit - the JLP way [10 Mar 2011]
Introducing a new kind of business organisation - the benefit corporation [17 Feb 2011]
CSR - What is “Creating Shared Value”? [16 Feb 2011]
Michael Porter - Shared Value and the Limitations of CSR [15 Feb 2011]
British exports - what does the government do to help? [10 Feb 2011]
CSR - The Classic Milton Friedman Clip [5 Feb 2011]
Q&A - What is “profit quality”? [7 Jan 2011]
BUSS1 Revision Quiz - Choosing a Legal Structure [15 Dec 2010]
Dominos Pizza - Growth & Strategy (Part 3) - Smart Marketing [26 Nov 2010]
Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service and Smart Operations [26 Nov 2010]
Dominos Pizza - Growth & Strategy (Part 1) - Driving Competitive Advantage [26 Nov 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
The pitfalls of setting up a partnership [2 Nov 2010]
Profits up at Amazon - but so are costs [22 Oct 2010]
Google, Profits and Diversification [16 Oct 2010]
Lesson Worksheet - Adding Value [10 Aug 2010]
Lesson Worksheet - Gross Profit Basics [5 Aug 2010]
Rising industrial unrest in China [29 Jun 2010]
Profit seeking paradoxes in an oblique world [15 May 2010]
Revision Presentation - Profit and Cash [30 Jan 2010]
Revision Presentation - Improving Profit [30 Jan 2010]
Product, pricing and profitability in a changing market [20 Jan 2010]
Revision Quiz - Profitability & ROCE [6 Jan 2010]
Revision Presentation - the Basics of Profit [30 Dec 2009]
Revision Presentation - Limited Liability [29 Dec 2009]
Revision Presentation - Startup Business Structures [29 Dec 2009]
Outdoor Ice-skating heads firmly down the product life cycle [3 Dec 2009]
Advertising Coming To A Windows 7 Desktop Near You [18 Nov 2009]
Innocent Drinks - Teaching Accounts Exercise [9 Nov 2009]
Q&A - Does globalisation benefit UK businesses and the UK economy? [27 Oct 2009]
Q&A - What are the main factors driving globalisation? [27 Oct 2009]
Q&A - What is globalisation? [27 Oct 2009]
Entrepreneur takes advantage of the postal strike [24 Oct 2009]
Quest-cussion [8 Oct 2009]
The Decline of Newspapers Creates a Surge in Local Startups [4 Oct 2009]
V-Water - from start up to exit [4 Oct 2009]
The dramatic slump in advertising revenue continues [18 Sep 2009]
Todd Stitzer’s Strategic Test [14 Sep 2009]
A dramatic fall in business investment [27 Aug 2009]
Product life cycle - end of the line for Teletext [17 Jul 2009]
How to improve profitability? - give customers a “staff appraisal” [12 Jul 2009]
Microsoft and Google compete head-to-head [9 Jul 2009]
Coffee Republic struggles with the daily grind [6 Jul 2009]
What makes a profitable menu? [6 Jul 2009]
Spare capacity prompts a fall in business investment [4 Jul 2009]
Q&A - Outline the main costs and benefits of inflation [1 Jul 2009]
Q&A - Explain the causes of inflation [1 Jul 2009]
Q&A - Explain the role of corporate objectives in business strategy [1 Jul 2009]
Nationalisation Again - National Express Taken into Public Ownership [1 Jul 2009]
A Mars A Day The Original Recipe Way [28 Jun 2009]
Budget Hotel Chain Now Feeling the Squeeze [17 Jun 2009]
A stunning example of how wage costs can differ for the same job [10 Jun 2009]
How to improve a profit margin through a hidden price increase - the Snickers way [4 Jun 2009]
Video case study - Rebranding acquisitions [1 Jun 2009]
Britain’s Got Talent - Extending the Brand [1 Jun 2009]
Sources of finance - the bank overdraft rip-off [28 May 2009]
Video case study - EU legislation impact on business [28 May 2009]
Business strategy video - two interviews with CEO of Virgin Atlantic [26 May 2009]
Q&A - Why are start-ups vulnerable to cash flow problems? [26 May 2009]
Q&A - How can a business handle a loss? [26 May 2009]
Q&A - How is profit used by a business? [26 May 2009]
Why businesses fail - an interview with Pepita Diamand [24 May 2009]
M&S suffers a fall in profits and cuts dividend [23 May 2009]
Video case study - subsidy boosts demand for small cars [23 May 2009]
BA posts a record loss [22 May 2009]
Q&A - What is meant by Social Enterprise? [22 May 2009]
AQA AS Business Unit 1 - Possible Evaluation Questions [17 May 2009]
Q&A -  What is share capital [2 May 2009]
Q&A - What are the benefits of business planning to a start-up? [1 May 2009]
Q&A - What is profit-sharing? [1 May 2009]
Q&A - How do changes in commodity prices affect businesses? [1 May 2009]
Q&A - What are the main legal areas that a start-up business needs to consider? [1 May 2009]
Q&A - Compare the advantages of trading as a sole trader versus a private limited company [1 May 2009]
Q&A - What taxes will a start-up pay? [1 May 2009]
Q&A - What are commodities and how are their prices determined? [1 May 2009]

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!