When you plan to initiate your business plan, the idea has a high chance to turn out to be beneficial for you for many reasons. You have exposure to enjoy the success factors like gaining autonomy, keeping all of the business profits, freedom of choice, and flexibility. By this, we are convinced to perceive that all of the hard work that you invest in the work will be way more rewarding than your employed position. If you are associated with a business as a sole trader and it is going well, ever wondered can a Sole Trader has multiple businesses?
Well, the good news is that you have all the rights to branch into your second business as a sole trader. You must be aware of the fact that sole traders can hire staff to support them in carrying out business activities. So this makes it quite possible to run multiple businesses in the UK. However, you are required to be well aware of the rules that you will be liable to follow. Therefore, we have gathered this based on one basis of frequently asked questions about having multiple businesses as sole traders.
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Can a Sole Trader Have Multiple Businesses in the UK?
If you are residing and carrying out a business as a sole trader in the UK, there is no limit to the number of businesses you can run. But, you will have to bring this into the knowledge of HMRC by declaring all of your businesses. This is vital, especially at the time when you plan to file your tax returns. Also when you are a self-employed individual, you are eligible to get the amount of personal allowance in the UK. Make sure you do not expect to get a personal allowance for all of your businesses. As you know you are not allowed to get tax free allowance for your second business or more.
By the end of each tax year, you will have to contact HMRC to inform them about the declaration of all your businesses as a sole trader. When it comes to financial records and other documentation, it is advisable to maintain separate records for each one of your businesses. Inform HMRC clearly that all these businesses are separate. You also have to run all of them independently. Consider the following points in this regard:
- You should have a separate policy of insurance for each business.
- The bank account should be separate for all businesses.
- Accounts and financial records will be separate as well.
- You can not transfer funds for your businesses without a business agreement according to the details.
Can A Multiple Sole Trader Influence National Insurance and Tax?
It depends on your income as an individual that will affect the calculations of national insurance and tax. If you are working with different employers and have different working positions, you will be taxed for each one of them. The same rule is followed when it comes to working as a sole trader and carrying out multiple businesses. Being a sole trader is related to a business structure and being an independent self-employed individual is considered to be your employment status. For practical reasons, both things are the same.
However, be aware while filing for your self-assessment tax return that you are filing for your employment status, not for your business structure. This will make you file for your self-assessment tax return only once, however, you will have to fill in the details of all the businesses you carry out. Whatever amount you are making as an individual from all of your sources will impact the calculations of national insurance and tax. As your total income is considered here.
Second Sole Trader Business – Implications to Consider Before Opening!
It is wise to look into all the set of rules and other implications for your existing business as well as the new business before you begin to venture into your new business endeavour. You should not rush into a new business without planning and considering all the aspects. This will be an expensive option. Before you plan and start another business, keep the following points in mind:
- What is the source of my capital to invest in the new business venture? If the income you will invest in the new business is from the source of your old business, ask yourself if it will be worth it to sustain. Or you will end up affecting both of your businesses.
- Consider the factor of time management. If you have plenty of free time slots to invest in both of your businesses? A new business will always require more time and struggle than an established business.
- Your businesses should somehow complement each other. Because what if your skills are not enough for a smooth transition among your businesses? You will have to go through a lot of mental struggle to switch from one working scenario to another.
The Bottom Line
Now that you have gathered a fair amount of information about can a Sole Trader have multiple businesses, we can say that there is no doubt that a sole trader can carry out more than one business. However, to ensure the smooth transition of all the businesses, one should follow the set of rules. Also, consider the factors before branching out to a new venture as this will help you to sustain your existing and new business activities. Getting in touch with HMRC to let them know about your businesses is equally imperative.
Disclaimer: The information about can a Sole Trader have multiple businesses provided in this article including text and graphics. It does not intend to disregard any of the professional advice.