At a relatively early stage in your freelancing journey, you'll need to let HMRC know that you're self-employed, so you can start completing the relevant paperwork. There are a number of ways of registering, but the most common is as a "Sole Trader". This is the most common route for self-employment, also known as a sole-proprietor.
A "sole trader" is an individual who owns and operates a business on their own. They are personally responsible for the business's debts and liabilities. In this business structure, there is no legal distinction between the owner and the business, meaning the sole trader has full control over the operations and keeps all the profits after tax, but they also bear all the risks and responsibilities. This is the simplest form of business ownership.
At the start of 2022, there were 3.1 million sole traders in the UK. The number of sole traders has shown a steady increase over recent years, reflecting the growing trend of individuals opting for self-employment and running their businesses independently.
It can be confusing and unclear as to why you'd choose sole-trader or registering a limited company (which technically is not self-employment, although many freelancers are running limited companies, and only employ themselves), so understanding the differences is important
