This is the most basic form of business model and it tends to be the classic “owner-manager” business; generally reserved for smaller businesses where there is only one owner.

There are few formalities required for the sole trader from an internal management point of view – all that is required is to maintain books of account, to record income and outgoings, which are then used to assess the owner’s tax. The owner will be self-employed and so, from a tax perspective, taxed on the profits of the business.

If there are employees, the business will need to register with HMRC as an “employer” and, if the turnover exceeds £83,000 a year, VAT registration will be required.

As the owner of the business, you will personally own all of the assets, but also be personally responsible for all of the debts of the business. Therefore your personal assets, including your home, may be at risk if the business fails.