Can a Sole Trader Have Multiple Businesses?
As a sole trader, you might well have more than one business. The good news is that it’s absolutely fine to do so – sole traders can have two (or even more!) businesses. Being a sole trader simply means you operate as an individual, so there’s no legal separation between you and your business (or businesses), and any profits after tax are yours to keep.
Do I need to register each sole trader business separately?
Having more than one sole trader business doesn’t mean that you need to register for self-employment again. When you set up your sole trader business HMRC will issue you with a unique registration number, so if you were to register again, HMRC would issue you with another UTR number, and expect you to complete separate tax returns for each business.
Instead, you’ll submit one single Self Assessment tax return, with a separate section to deal with each business.
How does this affect my tax, VAT and National Insurance?
There are tax, VAT and national insurance implications you should be aware of if you have more than one sole trader business. We’ve broken them down into sections below, to make it easier to understand.
Tax and NI for sole traders with more than one business
When you complete your Self Assessment tax return, you’ll be required to complete a ‘self-employed income’ section for each business. The amount of tax and NI that you owe as a sole trader will be calculated on the total amount of profits that you make.
Unfortunately, you will only get the Personal Allowance once, rather than an allowance for each business. This means that the tax free Personal Allowance only applies to the total amount of everything combined.
VAT for sole traders with more than one business
Sole traders can have more than one business, but should remember that they’re not legally separate from each sole trader business they have. This means that you must consider all of your sole trader income from each business to make sure you register for VAT when you’re supposed to.
You’ll need to become VAT registered if your taxable turnover reaches the VAT registration threshold in any 12 month period. If you have more than one business, the total turnover from all of your business income is used to determine if the threshold has been reached.
As the VAT registration is applied to all of your businesses, it means all of your customers will need to pay VAT. This might not be desirable for all of your businesses, so it’s worth thinking about how VAT registration might affect you as a sole trader.
Will I still qualify for the trading allowance?
The trading allowance is a tax-free amount for miscellaneous trading income up to £1,000. It is a form of tax relief for sole traders and those with side businesses. If your total business income is less than £1,000 a year, you don’t have to register for Self Assessment or pay tax on this income.
Talk to one of the team about our online accounting services for your sole trader business. Call 020 3355 4047, use the live chat button on screen, or get an instant online quote.
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I have a query. Can I consider my first self-employment as an umbrella for my other two? I first became an ordained minister; then I opened an online shop; then I decided to try to self-produce my own film (help appreciated!). HMRC saw all these as the same, with regards to my tax return; they said that as I was already registered as self-employed I didn’t need to register again. Can I consider my shop and my film production part of my ministry, or do I have to consider them separate from it? Thank you for your time.
Hi Angela, thanks so much for your message. Sole traders aren’t (legally speaking) separate from their businesses, so everything is combined. If you wanted to separate things, you could register the businesses as a limited company (or companies) for it not to be combined into the sole trader income. I hope this makes sense, but do contact the team if you wanted to chat more – just use the Live Chat button on screen, or call 020 3355 4047. All the best!
Thank you; that makes sense.
A further point to clarify.. Vat …If I have 1 business as a sole trader and 1 business as a Ltd company a different business… as far as vat is concerned are they treated seperately,and so If both stay under the vat limit. and say 60k each. will they be liable to pay and collect VAT . or if the combined total turn over of the 2 is more than 85K ..
Hello there
Limited companies are considered legally separate, so are usually treated separately for VAT, as long as the businesses are not linked in any way, and the type of trade that your businesses carry out are different.
There’s an HMRC guide on the topic, or chat to us about our VAT accounting services by calling 020 3355 4047.
I hope this is useful, but do let me know if there’s anything we can do to help!
Best wishes
Elizabeth
Hello. This is an interesting article. I have two businesses that are VAT exempt and I’m thinking of seting up a third completely different business that would charge VAT.
On there own they wouldn’t reach the VAT threshold however combined they would.
Would I just pay VAT on the business that is VAT applicable?
Thanks in advance
Bob
Hi Bobby
Thanks for your message! If your other two businesses are exempt from VAT then they won’t be considered within the threshold, so you can treat the third on as separate for VAT in this case. I hope this helps, or call one of the team for a chat if you like: 020 3355 4047, or use the live chat button on screen.
Best wishes
Elizabeth
I’m currently a sole trader & VAT registered as am over the VAT Threshold. I want to start up a 2nd business, but as a 50/50 partnership. On its own this will be under the VAT Threshold. Will this 2nd business need to be VAT registered as the combined income for me from both will be over the Threshold, or will it be treated on its own merits as its a partnership & not me as a sole trader?
Hi Jon
Thanks so much for your message. As long as the businesses aren’t linked in any way, and they are deemed to be different types of trade, then the VAT can be separate. If you wanted to read up on the topic further, HMRC have this guide or, if you like, chat to one of the team about our VAT accounting services on 020 3355 4047.
Hope this helps, but let me know if you need anything.
Best wishes
Elizabeth
Hi, Is it possible for a single sole trading business to have more than one business name?
Hi Ali
Absolutely! A sole trader is an individual, with no legal separation between you and the business. You can have as many businesses under the sole trader account as you like. Just note that turnover for all sole trader businesses will be grouped together for VAT purposes. Let us know if there’s anything we can help you with!
Best wishes
Elizabeth
Hi
I am a sole trader with two businesses. I want to close one and let HMRC know, but I can’t see how – only how to tell them that I’ve stopped being self-employed altogether, which isn’t right. Do you know how I do this, please?
Hi Jane
Thanks for your message. Sole traders aren’t legally separate from their business, so if one of your sole trader businesses stops trading, you’ll simply stop including it in your return once you’ve submitted the final figures for it, and continue submitting returns for your other business as normal. Just let us know if you need any help with anything!
Best wishes
Elizabeth
I am a sole trader and was trading with one business up to last year. I now wish to start a new business still as a sole trader. Do I start my invoice numbers from 001, or do I continue the sequence from my last business?
Hi Marie As a sole trader there’s no legal separation between you and the business, so this is a great question. It doesn’t really matter but ideally, because you’re continuing as a sole trader, it can be useful to make it clear that this is a different business. For instance, if the name of the business which you trade under is different, and this is apparent on the invoice. If you’re continuing to trade under the same name (which is common for sole traders, who simply use their own name as the business name), then it would be better for… Read more »
Hi there, I’m a sole trader with two businesses and looking for an accounts software (MTD-friendly) that will allow me to record both businesses separately, like the tax return currently does. They all seem to want me to pay for two separate accounts, even though I’m a sole trader and not VAT registered. Any ideas?
Hi Louise, Thanks for your message! Yes, this is possible with Pandle Pro. Set up your account once, and then you can switch between businesses. One of the businesses will be set up as a staff member of the other, so you can keep the businesses separate, only use one account, and only pay the fee once. If you’re already a TAP client, you’ll have Pandle Pro for free as part of our services, otherwise it’s £5 + VAT per month. There’s a free trial (no payment details needed!) if you want to try it out, or use the live… Read more »
Hi, I was wondering, if I set up a second business as a sole trader, how soon do I need to notify HMRC? Say I started my second business 6th April 2021, can I just add it to my 2021/2022 tax return? Or do I need to notify them first? How soon after I start my second business do I need to notify them?
Kind regards,
Hana
Hi Hana
If you’re already registered for Self Assessment as a sole trader, and set up a second sole trader business, you can simply include both on your Self Assessment tax return. You’ll need to include a separate section for each sole trader business on the return.
I hope this is useful, but just let us know if you have any questions, we’ll do all we can to help. To talk to the team, just call 020 3355 4047 or use the live chat button on screen.
Best wishes
Elizabeth
Hi – I’m a sole trader in the Film industry, paid as a sole trader because we go from one film to another, always with different companies paying us. In the last couple of years, because of streaming, jobs have got longer and longer, so that this tax year I will actually have been employed by one company for the whole 52 week and therefore my income will exceed the VAT threshold. If I therefore have to pay VAT on my income, would it be better for me to return to PAYE status in future? I don’t see what benefits… Read more »
Hi Pippa Thanks so much for your message! OK, so, registering for VAT is based on your total turnover from all your self-employed (sole trader) income in any 12 month period (rather than on the length of a contract). So, if you’re a sole trader, and your total taxable turnover (which is income before tax and other deductions) is £85,000 or above, or you expect it to pass the threshold within the next 30 days, you’ll need to register for VAT. The word ‘taxable’ is key here. In other words, the goods and services that you provide which you would… Read more »
Thank you! I haven’t charged VAT to my employer because the film industry doesn’t work like that – they pay you a weekly amount as self-employed and you don’t know when you start a contract, how long you’ll work for, so you don’t know if it’s going to go over £85k or not. I provide artistic talent (illustration, graphic design) which appears to be VATable. So if I now register for VAT, because I earned over £85k in the last tax year, what happens? Because I didn’t charge any because there was no mechanism for me to do so, and… Read more »
I am a sole trading Plumber, not Vat registered. I get very close to the vat threshold each year and worried I may need to register in the future. I had an idea just not sure it’s allowed, to set up a limited vat registered company which would sell supplies directly to the customer, under its own brand and have its own invoices etc. it would have a mark up of 20% on the cost. I would then work for the customer doing the job and produce a labour only invoice, it may include some small material and sundries cost… Read more »
Hi Jack Thanks for your message. This is a tricky one! Technically what you’re proposing is two revenue streams, one for labour and one for the resale of stock/supplies. Providing you could demonstrate this is solely for genuine commercial reasons, and not just for the purposes of avoiding taxes, it may be ok. However, it does sound very close to artificial separation as the two businesses are so closely linked. Artificial separation refers to businesses being separated in a way which helps avoid VAT liability. It may be best if you take professional advice on this to make sure you… Read more »
Hi. Im hoping you can help. I’m currently self employed but considering starting up a separate business with a partner as a limited company. Would I need to put the money i earn from the limited company on my self assessment or would it be taxed through the PAYE system? Also would i pay a higher rate of tax if making money from a second income
Hi Hayley Thanks for your message. When you register a limited company the business is a separate legal entity to you as the owner. This means that the company has it’s own tax return (a Company Tax Return, and pays Corporation Tax) on the profits that it makes. Your Self Assessment deals with your income, so any income that you take out of the company for yourself will go on the Self Assessment tax return. To pay yourself from the limited company, you can either: pay yourself a salary through a director’s payroll, and pay tax through PAYE. You’ll still… Read more »
So if I already have a Ltd company but then decide to start a separate Sole trading Business as well, do i need to register as being a Sole trader with HMRC when i already have aUTR number and complete a self assessment tax form for my earnings from the Ltd company? Can’t i just add the Sole trader Profits to the Self assessment form under the Sole trader section?
Hi Scott Thanks so much for your message. If you already have a UTR number for Self Assessment as the director of your limited company (your limited company has a separate UTR number, don’t mix them up!) then yes, you can add a section to your Self Assessment to tell HMRC about your sole trader business when you submit your return, but it’s important to note that if you use this method it doesn’t register for class NI 2 correctly. This link to HMRC (https://www.gov.uk/register-for-self-assessment/self-employed) might help. Scroll down to ‘if you’ve filed a tax return online before’ it explains… Read more »
If I am a sole trader and I have 2 different sources of income (no Ltd company setup for either):
The 1st being income from a Furnished Home Let and the 2nd being tech consulting, and only if the incomes from each were put together would I hit the £85k VAT threshold, do I have to register for VAT?
Hi there, Thanks so much for your message! If the two trades are very different then you can sometimes avoid VAT registration as long as you can demonstrate that they are two different types of trade. In this case it is very clear they are different. However, say you had a hairdressing salon and you received funds for goods as well as for services, it would be difficult to say the sale of the goods is different to the service, as they are closely related, so in this case you would need to contact HMRC to confirm whether they needed… Read more »
Hello, thanks for the informative post. Just still unclear on one thing. Hope you don’t mind a question. I work as a masseuse (sole trader), but also starting to make a small amount of income as an artist (large outgoings at the moment as I am setting up). I use a personal bank account as my masseuse job funds my art. Is it a legal requirement for me to use separate bank accounts for my masseuse business and my art business? My art business doesn’t make enough money to cover its outgoings so a separate bank account seems impossible for… Read more »
Hi Kate Thanks for your message! As a sole trader there’s no requirement to have a separate business bank account (unlike for limited companies which must). That said, it is best practice to keep everything separate, but if this isn’t practical, you’ll need to make sure that your bookkeeping is meticulous, and that you can demonstrate what each transaction relates to. If you need any help with anything, just let us know! It might also be worth looking into bookkeeping software which can help ease the admin burden. We provide Pandle Pro to our clients, which also has a free… Read more »
Hello, I also have a query. Maybe you can help. I am a sole trader and I am also VAT registered. I provide engineering services and I have a trading name. Example: John Mayer trading as JM Scaffold Design. Can I have another trading name providing same services but still keep the JM Scaffold Design? Example John Mayer trading as MJ Scaffold Design. If yes, I know at the end of day I need to combine the income from both trading names + vat number will remain the same but on my Invoices do I need to specify both trading… Read more »
Hi Edmond
Thanks for getting in touch! As you’re a sole trader we think you would be ok just using the one name on the invoices in which it relates to, as long as you combine the income on your Self Assessment and on your VAT returns. I hope this helps, but do let us know if there’s anything else we can do for you!
Best wishes
Elizabeth
Hey, I am currently in full time employment but also have a business which I am registered as a sole trader. It’s a raffle competition website which comes under ‘lottery’ and is exempt from vat threshold purposes.
Looking at starting another business on top that would have to be registered for vat.
How would I go about it?
Hi Stewart Thanks very much for your message. So the VAT registration process is fairly straightforward, and we have this article which goes into it in a bit more detail if that helps as a starting point. Basically, sole traders aren’t legally separate from their business. If you have multiple sole trader businesses (assuming that’s how you decide to register your new enterprise) and register for VAT, all of them will become registered, but this won’t affect any sales which are VAT-exempt. So, if the sales in your current sole trader business are exempt, they’ll still be exempt after you… Read more »
Get post, it has helped me so much! So I have a sole trader business, and in August 2022 I started renting out my house. After reading your other page on ‘should i own my property through limited company or sole trader’, I have decided I need to put my house rent as a limited company (more benefits). My question is, can I register it now and say it started August 2022? and, I already fill out my self assessment for my sole trader business, and have my own UTR number, so for the limited company, is there a form… Read more »
Hi Charlotte Thanks for your message, I’m glad it’s helped! You can indeed register a limited company to own your property, but there are a few things to consider: Your company will need to ‘own’ the property, which would mean transferring ownership – and this might incur property tax (in England this is Stamp Duty Land Tax, Wales has Land Transaction Tax, and in Scotland it’s called the Land and Buildings Transaction Tax) You wouldn’t be able to backdate the point at which the company owns the property Once you register for a limited company, you’ll have a separate UTR… Read more »
Hi, I’ve got a question relating to this. I’m currently a sole trader doing remote contractor work providing 3D Art services to clients in the US. I’m also wanting to start up another business which entails 3D printing physical goods and shipping those to the UK, and likely the EU and the US as well. The last 12 months of contracting have been quite good for me and I’m close to having earned over 85K income. I was told that since I provide services from the UK to the US I would need to consider the VAT rules in the… Read more »
Hi Jes Thanks very much for getting in touch. OK, so the UK VAT registration threshold is based on any UK sales that hit the £85k in a 12 month rolling period. The place of supply for services, generally speaking, is where the service is received. So if the service is received outside of the UK this will not count towards the VAT threshold. We can’t really comment on obligations in other countries, but for the UK in particular you would only need to consider services received in the UK when working out if you have reached the VAT threshold.… Read more »
Hi, Looking for a bit of clarity if possible. I run a retail business as a sole trader which I’m vat registered for. one of the stores buildings I own and looking to develop this building, this would then be a second business. The costs of developing the building include a lot of vat, can I use my current vat registration to claim the vat in the building costs back? Or would I need a separate vat certificuite as a separate business to do this? also would I then have to charge vat on the rental as id be vat… Read more »
Hi Chris, Thanks for your message. This is quite a complex area! As a sole trader you’re not legally ‘separate’ to the business, so if you register the second business as a sole trader then technically all of your business activities will be covered under a single VAT registration. If the trades are very different you can ask HMRC for an exception to separate the income. However, if the costs are considered repairs and maintenance and in the course of trade, then yes, you can claim the VAT back here. If you register your second business as a limited company,… Read more »
Hi Elizabeth, Congratulations on a great post, it’s been running for years!! I’ve had a look through the existing Q&As but can’t find my particular question, so I’m going to ask it, if that’s ok. I have two unrelated sole trader businesses. I would like to keep all the accounts separate and have separate CCards and Bank Accounts. I have done this. All good. However, I am VAT registered and I can’t figure out how to submit a single consolidated VAT return. I use Zoho Books and it can file returns digitally (as per the MTD requirements) but only per… Read more »
Hi Stephen Thanks for your kind words! This is a tricky one, and you might be best off chatting to someone from the software advisor about any solutions they might have. Depending on your circumstances, one possible option might be to use bridging software to make your submissions. This is software which works with non-compatible software (like spreadsheets, if you were to export them from your software or use them for your bookkeeping) so that you can send the required information to HMRC digitally, and in the correct format. HMRC have a list of approved bridging software providers on their… Read more »
Hi, I currently have a limited company, but would now like to open a separate business as a sole trader. How would I go about opening the new sole trader business as I already had to register for self assessment with the limited company?
Thanks
Hi Saima Thanks so much or your message! If you submit your Self Assessment tax return online you’ll be asked a series of questions about the income that you earn, which HMRC then use to populate your return with the correct sections for you to fill in. If you submit a paper return, you will need to include the supplementary forms SA102 to report the income you receive as a director, and a separate SA103 form to report each source of self-employed income. So, you will complete a single Self Assessment tax return, but with one section to report the… Read more »
Hi, thanks for the very useful article. Please can I clarify something regarding having two separate names as a sole trader. My son wishes to set up as a sole trader but doing two separate jobs. One is contracting himself out doing agricultural work and the other buying and selling 4 x 4 vehicles. So he would invoice the contracting as John Smith trading as JS Agri Services and the other as John Smith trading as JS 4×4. Could he lump the income all together on his tax return or will he have to separate the income and show them… Read more »
Hi Chris Thanks very much for your message – happy to help! It’s actually quite common for sole traders to operate multiple businesses at once, and use different trading names for them. Your son will need to submit one single Self Assessment tax return (because this relates to him as the taxpayer, rather than to the business). That tax return will need to include a separate ‘income from self-employment’ section for each business, and he can add these to the form when he completes it. Just as a side note, he’ll need to be careful that his bookkeeping records clearly… Read more »
I think the query above is actually my answer … two separate income from self employment sections. Not sure how I get another one online but I’m sure I can find out. Thanks again…and Happy Christmas. 😀
Hi Anne
Thanks for your messages, I hope you had a lovely Christmas! So, when you start to fill out your tax return there will be a question which asks ‘how many self-employments have you had?’. If you enter ‘2’ in this box, the form will then create two self-employment sections. I hope this helps, but please do let us know if there’s anything you need.
In the meantime, all the very best for a successful and happy 2024.
Best wishes
Elizabeth
Thanks for a very helpful article. I run two completely different businesses as of this year but I can only see space on the self-assessment form for one business. Should I just squeeze both into the one box?
Thank you!