August 21st, 2019.

If you are self-employed then this means you work for yourself, and not for an employer. A sole-trader is a self-employed person, but they are the sole owner of their business.

Within three months of becoming self-employed you need to inform HMRC so they can ensure you are paying Class 2 NICs and you fill in a self-assessment form.

Company directors are not self-employed. Many directors are employees of their company and will be paid as employees in the normal way.

Sole trader vs limited company
 Although being a sole trader avoids all the hassle of registering with Companies House and presenting annual accounts, one downside is that your personal assets are not distinguishable from your business assets. In short, your creditors could come after your house and possessions if things go wrong.

And if you are earning over £100,000 as a sole trader, you would be advised to set up a limited company; sole traders lose their personal allowance over the £100,000 threshold, so that anybody earning between £100,000 and £125,000 tax will be taxed at 60pc as opposed to the corporation tax rate of 19pc (due to go down to 18pc in 2020).

For the full story at smallbusiness.co.uk CLICK HERE.