What is a sole trader?

If you're a sole trader, you run your own business as an individual and are self-employed. You can keep all your business's profits after you've paid tax on them. You're personally responsible for any losses your business makes. To set up as a sole trader, you need to tell HMRC that you pay tax through Self Assessment and file a tax return every year.

Can I work as a sole trader on Worksome?

Yes, all types of contractors can be paid by Worksome in the UK.

What are my options in Worksome?

Sole Traders can be paid gross on the Worksome platform if the hiring company agrees, or if:

  • You work exclusively from home or a managed premises

    or
  • You can provide physical evidence of an HMRC exemption (see here if you are on the HMRC Grading List)

If neither of the above:

  • Use Worksome’s Umbrella solution
  • Use an Umbrella of your choice ☂️
  • Incorporate as a Personal Service Company (PSC) or Ltd Company

You can choose one of these options in your Worksome account under the “Business Entity” section in your Freelancer Settings. If you are a Worksome Freelancer, head here to do that now.

Why won’t some companies work with sole traders?

Risk. Businesses in the UK are highly regulated, with law requiring income tax and National Insurance Contributions (NICs) to be deducted at source for sole traders to ensure that tax is being paid to HMRC for their projects.

What is the risk for you as a Sole Trader?

Your own assets might be at risk. Being a Sole Trader carries a lot of liability with litigious clients. As Sole Traders operate with both their business and personal assets together, unlike if you were operating as a PSC/Limited Company, assets like your home and other personal items might be at risk if you were ever sued by a client.

What can I do to work for companies who won’t work with Sole Traders?

Ultimately this is the client’s decision, not Worksome. If they decide not to work with you, even if off-site or on the HMRC Grading List, you may have to try the other options.

Worksome Umbrella can manage your taxes for you, and make sure that PAYE deductions are taken from your contracts and bills in Worksome. Some companies using Worksome make this mandatory for all contracts with Sole Traders.

Alternatively, you can use another umbrella company, set up a Limited Company - or decline the contract!

What does Worksome need from me?

Update your Worksome Freelancer profile. Simply make sure your Business Entity is set up correctly in your Settings, here. If you are a Sole Trader in the UK, make sure your UTR number is included, for instance.

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Do you have questions? Just reach out to us via chat, email or phone and we are always super happy to help out!

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