If you’re a sole trader, you may wonder if it’s possible - or even necessary - to have a business name. The good news is that sole traders can trade under a company name. In this article, we’ll explore what it means to be a sole trader, how to name your business, and the rules you’ll need to follow when choosing and registering your name.
What is a sole trader?
A sole trader is the simplest form of business structure in the UK. As a sole trader, you are the sole owner and are personally responsible for your business’s finances, liabilities, and operations. This type of business is ideal for freelancers, tradespeople, and small business owners who want to work for themselves with minimal setup and reporting requirements.
Key features of being a sole trader:
You keep all the business profits after taxes.
You are personally liable for any debts the business incurs.
It’s quick and easy to set up, with fewer legal and administrative obligations compared to limited companies.
Can you name your business as a sole trader?
Yes, sole traders are allowed to have a business name and trade under it. You can choose to operate under your own name or create a unique business name to reflect your brand or services. For example, if your name is Jane Smith and you’re a photographer, you could trade as 'Jane Smith' or 'Smith Photography'.
Using a business name instead of your personal name can help you stand out, appear more professional, and attract customers who associate your name with your specific products or services. When selecting a name, it’s important to ensure it’s not already in use or trademarked by another business.
Are there any naming limitations?
While sole traders have the freedom to choose a name for their business, there are some rules and restrictions to follow:
Avoid misleading names: Your business name must not mislead customers or suggest an affiliation with a government body or another organisation. For example, you cannot use terms like 'Royal' or 'Chartered' unless specifically authorised.
No offensive language: The name should not contain any words or phrases that are deemed offensive or inappropriate.
Avoid existing trademarks: Check the Intellectual Property Office (IPO) database to ensure your chosen name isn’t already trademarked by another business.
Differentiate from limited companies: If you choose a name similar to an existing limited company, you must make it clear that you are a sole trader and not a limited company.
💡Editor's insight: "You can search for trademarked companies using Gov.UK's search tool."
Do you need to register your name?
Sole traders do not need to formally register their business name in the same way limited companies do. However, you are required to provide your business name (if you’re using one) when registering for self-assessment with HMRC. You’ll also need to display your business name clearly on all correspondence, invoices, and promotional materials. If you’re trading under a name that isn’t your own, you must include your full name alongside the business name. For example: Smith Photography (Jane Smith)
How do you register as a sole trader?
Setting up as a sole trader is a straightforward process. You’ll need to register with HMRC for self-assessment to declare your income and pay tax on your business profits.
Here’s how to get started:
Check your eligibility: You must be over 16 years old and reside in the UK.
Choose your business name: Decide whether to trade under your own name or a business name, ensuring it complies with naming rules.
Register with HMRC: Sign up as a sole trader online through HMRC’s website. You’ll receive a Unique Taxpayer Reference (UTR) to use for tax purposes.
Keep accurate records: As a sole trader, you’ll need to maintain detailed records of your income and expenses to complete your annual tax return.
Set up National Insurance contributions: You’ll pay Class 2 and Class 4 National Insurance, depending on your earnings.
What documents do you need to register?
When registering as a sole trader, HMRC typically requires:
Your National Insurance number
Personal details such as your name, address, and date of birth
Details about your business, including your chosen name and the nature of your trade
A record of any previous self-employment or tax history, if applicable
This process can usually be completed online in a matter of minutes, and you’ll receive confirmation from HMRC once your registration is complete.
Does a sole trader need a memorandum of association?
No, a sole trader does not need a memorandum of association. A memorandum of association is a legal document required for setting up a limited company. As a sole trader, you only need to register with HMRC for self-assessment.
FAQs
Should a sole trader register as a company?
Sole traders are not required to register as a limited company. However, some choose to incorporate their business as it grows, particularly if they want to limit personal liability or gain access to tax advantages available to companies. Registering as a limited company can also make your business appear more established and may help when applying for loans or contracts with larger organisations. You can learn more in our complete guide to sole traders vs. limited companies.
How can you protect your name as a sole trader?
To protect your business name, you can:
Register a trademark: Applying for a trademark through the Intellectual Property Office ensures legal protection and prevents others from using your name.
Purchase a domain name: Securing a website domain that matches your business name helps establish your online presence and prevents competitors from using it.
Check for duplicates: Regularly search company directories and social media platforms to ensure no one else is trading under your name.
Final thoughts
Being a sole trader gives you the freedom to run your business your way, and choosing a unique name can help you stand out and look more professional. Although you don’t have to formally register your business name, following the rules for naming, registering with HMRC, and protecting your name can make all the difference. Whether you’re just starting or planning to grow your business, taking a smart approach to branding and compliance will set you up for long-term success.
References
Sole trader business names from Gov.UK