What is a Sole Trader?
The number of people working as a Sole Trader in the UK is increasing all the time and it is estimated that at present over 6 million of us work in this way.
So what is a Sole Trader, simply speaking it is someone who runs their own small business but does not set up a Limited Company. By doing this they avoid all administration, legal requirements and of course the expense of setting up and running a Limited Company.
One of the major benefits of working as a Sole Trader through MyPay SE is the reduced levels of National Insurance you pay as a self employed worker. This is Class 2 National Insurance which is £2.50 a week and Class 4 which is 9% on the profit of your business. This is compared to Class 1 National Insurance Contributions that you pay as an employed worker which is 13.8% employers NI plus up to 12% employees NI.
As a Sole Trader your tax and National Insurance Contributions are taken from the profit your business makes. It is therefore very important to ensure that you keep a record of all the money paid in (turnover) and the business expenses you incur (expenditure). This is where using an administration company such as MyPay can help you to ensure that you pay the correct levels of tax and NIC.
If you are not already set up as Sole Trader, you would need to register as self employed and also register for Class 2 National Insurance. For information on this please refer to the MyPay SE guides and forms on this website or contact MyPay SE on 0844 879 7201.