Facebook Twitter Linkedin Instagram Pinterest
Instant Quote
Call Me Back
Can a Sole Trader Have Multiple Businesses

Can a Sole Trader Have More Than One Businesses?

13/09/2022Finance , Sole Trader

Yes, a sole trader can run multiple businesses at the same time. About 3.1 million sole traders do it in the UK, but 20% of sole traders fail within their first year, and 60% don’t make it past five years, according to the Institute for Fiscal Studies, whose findings were based on HMRC tax records reported by BBC News.

While it’s completely legal, running multiple businesses as a sole trader comes with responsibilities. For success, you’ll need to know how taxes work, what (and if) you need to register, how to stay on top of admin, accurate record keeping and whether there comes a point where a different business structure (like a limited company) might make more sense.

Let CruseBurke expert accountants simplify the process and help you make the best decision for your business.

What Is a Sole Trader?

A sole trader is a self-employed person and runs one or more businesses on their own. There’s no legal difference between the person and the business. You keep the profits, but you are also personally responsible for debts and obligations. If something goes wrong, your personal assets may be at risk.

As a sole trader, you’ll need to register with HM Revenue & Customs (HMRC) for Self Assessment (HMRC’s system for collecting Income Tax from self-employed individuals) once your self-employed income goes over £1,000 in a tax year.

Is It Legal to have more than one Business as a Sole Trader?

Yes, it is legal. You can run more than one business at a time as a sole trader. HMRC recognises that many people do this. The businesses may be different kinds (say baking cakes in one, doing graphic design in another), or related. You don’t need separate legal entities for each. But there are implications, especially around tax, VAT, and paperwork.

Do You Need to Register Each Business Separately?

No, you don’t have to register each business separately with HMRC if you are already a sole trader. You’ll have one Unique Tax Reference (UTR). All your businesses are under that UTR. You report them separately in the same Self Assessment tax return, each business having its own “trade” section.

How to Register a Second Business as a Sole Trader

You don’t really “register” a second sole trader business as such. If you are already working as a sole trader, you inform HMRC of what you’re doing when you submit your Self Assessment. If the new trade is very different, you keep records separately. You may need to update your business name or trading style, but you will still use the same UTR.

How Tax and NI Work for Multiple  Sole Trader Businesses?

Suppose you run more than one business as a sole trader. In that case, all profits from all businesses are added together for Income Tax and National Insurance. You fill in one Self Assessment tax return and declare each business’s income & expenses separately, but the total taxable profit determines your tax band. You don’t pay separately for each business.

You may also pay National Insurance Contributions (NICs). Since April 2024, Class 2 NICs are no longer compulsory, but you can choose to pay them voluntarily to protect your entitlement to certain benefits like the State Pension. Class 4 is based on profit levels. Rates change over time.

How Much Tax Do You Pay Running Your Own Business?

For 2024/25:

First £12,570 of profit is tax‑free (Personal Allowance). You only get one Personal Allowance. That’s the income you can make without paying Income Tax. Profits above that are taxed.

  • Any profits between £12,571 and £50,270 are taxed at the 20% basic rate.
  • Between £50,271 and £125,140 taxed at 40%.
  • Above £125,140 taxed at 45%.

Class 2 NICs are no longer compulsory from the 2024/25 tax year. If your profits are above the Small Profits Threshold (£6,725), you will automatically receive a qualifying year for State Pension purposes. If your profits are below this threshold, you can choose to pay Class 2 NICs voluntarily to build entitlement to the State Pension and certain other benefits. Class 4 NICs based on your profit levels. For the tax year 25/26, — 6% on profits between £12,570 and £50,270, and 2% on profits over £50,270.

How Does Tax Work If You are Employed and Self‑Employed?

If you have both employment income (PAYE) and self‑employed income, both are added together to calculate your total income. You get the same Personal Allowance to use across your total income. You pay tax on your combined income (profit). HMRC will deduct some of your income via PAYE for your employment. Then your self-employed profits are added and taxed via Self Assessment. NICs are separate: employee NICs for your PAYE job; self‑employed contributions (Class 2(voluntary) and 4) on profits.

VAT for Sole Traders with Multiple Businesses

VAT rules mean you must look at the total turnover of all your businesses combined (for VAT purposes). If that total goes over the VAT registration threshold, you must register. As of April 2024, that threshold was raised from £85,000 to £90,000.

Even if one business is small and another is large, they together can push you over the limit. If that happens, you must register, charge VAT, and file VAT returns.

Can I have Two Businesses to Avoid VAT?

No, you cannot legally run two businesses as a sole trader to avoid VAT registration if their combined taxable turnover exceeds the VAT threshold, which is £90,000 (as of 2024/25 in the UK).

HMRC treats all your sole trader income as one when it comes to VAT. So if you operate two different sole trader businesses under your name, their sales must be added together. Suppose the total turnover for VAT‑eligible goods or services goes over the threshold in any rolling 12‑month period. In that case, you must register for VAT, even if no single business crosses it on its own.

What if I Split the Businesses Under Different Names?

Trying to artificially split one business into two or more to stay under the VAT threshold is known as “business splitting”, and HMRC watches out for it. If they believe the split is done only to avoid VAT, they can treat the businesses as a single entity and require VAT registration.

This could also trigger penalties and backdated VAT liabilities.

What to do instead?

If VAT registration is a concern, consider:

  • Reviewing your pricing strategy to absorb VAT impact
  • Exploring Flat Rate VAT Scheme (if eligible)
  • Consulting an accountant to help with legitimate tax planning

Can One Business Be VAT-Registered and the Other Not?

No, under sole trader status, the VAT registration applies to you, the individual, not each business. So if you reach the threshold, you must register, and then all your taxable business activities are under that registration.

The Trading Allowance of Multiple Businesses

There is a trading allowance of £1,000 per tax year. If your total income from self-employment (across all businesses) is under that, you might not need to pay Income Tax on that income, or even register for Self Assessment in some cases. But once you’re over, you’ll need to declare everything. If your income exceeds £1,000, you must register for Self Assessment and declare the full amount. At that point, you can choose to either:

Deduct the £1,000 trading allowance from your gross income (instead of claiming actual business expenses), or

Deduct your actual allowable business expenses (if they’re more than £1,000).

Running Two Businesses Under One Name: Is It Allowed?

You can operate under one trading name or have different trading names for different ventures. What matters is that HMRC knows what you’re doing in your Self Assessment. As long as your trading name isn’t misleading or breaking business name rules, it’s OK.

What are the Disadvantages of being a Sole Trader?

Here are some of the downsides to running multiple sole trader businesses:

  • Easy to mix up personal and business expenses.
  • Unlimited personal liability: If something goes wrong in any business, you are personally responsible. Your car, your savings, your home could be at risk.
  • One tax return for all profits: Profits from all businesses are added together. If combined profits are high, you could move into a higher tax band.
  • More admin: More invoices, more expenses, more bookkeeping. It can get messy.
  • Time, money, energy. Running two businesses doubles the number of tasks. Might burn you out.
  • Growth limitations: If one business becomes large or risky, being a sole trader might not offer enough protection. Also, investors often prefer limited companies.

Keeping Separate Records of Multiple Businesses

Even though legally you’re one person with one UTR, it really helps to keep the books of each business separate. That means separate income, separate expenses, invoices, receipts, and bank entries. This makes Self Assessment easier. It also helps you identify which businesses are doing well and which might need fixing.

Accounting Software for Sole Traders

Good accounting software can do wonders. Look for ones that allow you to have multiple “trades” or business lines. Features to consider:

  • Cloud accounting (e.g., Xero, QuickBooks, FreeAgent)
  • Automatically separate profit/loss per business
  • Track expenses (fuel, materials, equipment) per trade
  • Easy invoice and Receipt scanning apps
  • Digital record keeping (especially if VAT registered)
  • Time tracking (if you charge for time)
  • Planner/reminder apps for deadlines
  • Many plumbers, designers, caterers, and other professionals use cloud-based tools.

It saves time, prevents errors, and helps you stay tax compliant.

Best Practices for Bookkeeping and Admin

Good bookkeeping helps you track your profits, manage cash flow, and stay prepared for tax time. Here are some simple tips:

  • Use separate bank accounts (or at least clearly tagged transactions)
  • Keep receipts, invoices, and bills for at least 5 years after the tax return date.
  • Review your business finances on a monthly or quarterly basis.
  • Use spreadsheets or software dashboards to compare performance.

What is the Difference Between a Sole Proprietorship and a Limited Company?

As a sole trader, you personally own everything, with unlimited liability, and are taxed as an individual (Income Tax + National Insurance), with simpler reporting requirements.

If we compare it to a limited company in the UK, the company is a separate legal entity. You might pay Corporation Tax ( tax that limited companies pay on their profits), then take profits via dividends or salary. Limited liability protects personal assets more.

Considering the benefits of a limited company helps you understand why some people opt to form a company when managing multiple or larger businesses.

When to Change from Sole Trader to Limited Company?

Stay sole trader if:

  • You’re just starting out
  • Profits are modest
  • You want simpler admin and fewer legal requirements
  • Risk is low

Consider forming a limited company (or multiple) if:

  • Profits are increasing significantly
  • Some businesses have higher liability or risk
  • You want better tax planning options
  • You aim to attract investment or scale

Can a Sole Trader Own More Than One Limited Company?

Yes, owning limited companies is different. Every limited company is legally distinct from its owners. They each have their own legal and tax responsibilities. You could have two limited companies alongside or instead of your sole trader ventures.

Pros of Setting Up Separate Limited Companies

Here are some of the benefits they offer compared to running everything as a sole trader:

  • Limited liability protection: Your personal assets are better protected if things go wrong.
  • Separation of finances, risk, and branding: Each company stands on its own
  • Attractive to investors: Limited companies are more “official” and may inspire more confidence in investors.
  • Greater tax planning flexibility:  e.g., paying yourself via salary + dividends reduces corporate tax.
  • Easier to sell or transfer ownership of one company without disturbing the others
  • Clarity for clients and customers: You can have two different companies of cosmetics and baking items, the clients won’t be confused why a cosmetic shop is selling baking items.

Things to Consider Before Running Multiple Companies

Of course, there are trade‑offs:

  • More admin: There might be more admin and compliance, each company must file accounts, pay Corporation Tax, etc.
  • Additional fees: Costs are higher for accountants, filing fees, and possible audit. You can use the bookkeeping software without taking too much time.
  • Tax Complexity: There might be complexity in tax. You’ll have to manage separate financials, possibly different tax years.

Professional Guidance

A sole trader can have multiple businesses. You report them under one UTR and one Self Assessment, with separate trade sections. All profits are added up for tax and NICs. You only get one Personal Allowance per year. VAT registration is based on the total turnover from all those businesses combined, the threshold is now £90,000 rolling 12 months. Good record-keeping and using appropriate tools can make life easier. Sometimes, switching to limited companies or having some of your businesses as limited companies can bring benefits.

Tax and business structures can get complicated. What works for one person might be bad for another. It’s wise to consult with an accountant or business advisor  especially when profits rise, you are mixing business and personal finances, or thinking of changing structure. Small mistakes can cost money or cause penalties.

Let’s get the best advice on your business and how it can affect your taxes as a sole trader from the top-notch legal and tax advisors at the CruseBurke. Send us a message or give us a call.

Disclaimer: All the information provided in this article on Can a Sole Trader Have Multiple Businesses, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.

   

Related post

increase in national insurance tax
How will the Increase in National Insurance Tax Affect You?

15/11/2022tax , Tax Issues , Tax News and Tips

When there is a fluctuation observed in the tax rates of the national insurance, you will definitely be affected when you are residing in the UK. How much will you be affected has a direct relation with the amount of money that you are earning. According to the recent changes that are implemented from the month of July 2022, individuals with a low scale of salary are saved and will be able to increase their savings because of the increase in national insurance tax. The high earners on the other hand will not be able to save much if you go in comparison with the tax year 2021-22. Some people will even observe a sudden rise in the take-home amount of their salary. Further in the discussion of this article, we will gather information about what is national insurance to be exact, how will the increase in the national insurance tax rate can affect you, and how to use the NI calculator to calculate national insurance. Reach out to one of our professionals to get to know what is the best way to handle the increase in national insurance tax for your earnings in the UK.  What is National Insurance? The type of tax that is obligatory for employers and employees is known as national insurance and this is paid on the amount of money they earn on a monthly basis. In the case of individuals who are self-employed, they will have to pay national insurance on the amount of money that is earned from the business profits. If we talk about the basics of national insurance it was passed in the year 1911. At that time the purpose of introducing national insurance was to provide help to people who needed help with finding jobs or going through medical treatment during that period. After a certain period of time, the state pension was introduced for the financial benefits and gains of the people. The government sometimes withdraws some amount of money from the national insurance amount to support the relevant project for the betterment of society. It is imperative to add to the knowledge that it is allowable only for those who have crossed the age of sixteen. Since they are not eligible to get any retirement benefits. The main types of national insurance are four that are listed below: Class 1 – Employers and employees will pay for this class. Class 2 – It is a flat rate that is payable by self-employed individuals. Class 3 – This includes the voluntary contributions by people who are under no obligation to pay NI. Class 4 – If the self-employed business profits go above a certain level, this type of national insurance is payable. The Increase in National Insurance Tax Rates and How Will it Affects You? It has become to implement the recent changes of the increase in the tax rates of the national insurance after the new tax year was started. The ratio of this increase is between the limit of 12% to 13.25% for the employees. Individuals who are earning an amount of £4,189 or more than this within the period of a month will have to deal with the increased tax rates of the national insurance. Moreover, there is a piece of good news with this implementation of the increased rates in the national insurance tax that it will remain intact till the month of June only. The income tax threshold and the national insurance threshold will be the same from the month of July. You will be able to keep yourself away from the payments of national insurance and the income tax if your income is lower than the amount of £12,570. How to Measure the National Insurance Tax Rates With the NI Calculator? In the UK the employees have observed a sudden raise in the tax rates of the national insurance at the beginning of the tax year, however, this was sorted out because a sudden raise in income was also observed from the month of July. Most of you would like to have a clear idea about the effects of the sudden fluctuation in the tax rates of national insurance. The NI calculator can be a great help in this regard. To do the process of calculation, you will have to enter the amount of your income and the fluctuated rates and you will get the results of how the recent increase in the tax rates has affected your income. The Bottom Line Now that you have gathered a fair amount of information about the increase in national insurance tax, we can bring the discussion towards wrapping up. There is no denying the fact that the fluctuation in the tax rates can affect your income on a regular basis and if handled professionally, you will get a clear idea of how to calculate the changes and their effects on your salary. We hope these few minutes of reading have helped to develop a better understanding of the national insurance and tax rates. Get in touch with our young, clever and tech-driven professionals if you want to choose the best guide for the increase in national insurance tax in the UK  for your income.  Disclaimer: The information about the increase in national insurance tax provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

Read more
How to Pay Yourself as a Business Owner
How to Pay Yourself as a Small Business Owner?

15/04/2022Business , Business Growth Ideas

When you are associated with the business as an owner regardless of the size of your business, you definitely realise that it affects your business growth when you pay yourself for it. Further, you are even taxed on that pay as well. How to pay yourself as a business owner is something really important to understand to avoid any bad impact on your business growth. If you have not set up a specific type of structure, this makes you come under the sole trader business structure automatically. Further, in today’s article, we will talk about how to pay yourself as a sole trader, in partnership, and as a company. Before we delve into the discussion, let’s have a look at the point we have got covered here in the article. This includes the following: Learn to Pay Yourself as A Partner and Sole Trader How to Pay Yourself As A Business Owner or Company How much to Pay Fairly? Final Thoughts Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Learn to Pay Yourself as A Partner and Sole Trader The simplest way that usually the sole traders and the individuals in partnership use to pay themselves is to withdraw the cash payment from the business account. These kinds of personal withdrawals from the business accounts are added to the list of profits. This amount is also taxed by the end of the tax year. It is also recommended to keep the amount in a separate account and keep adding chunks every month. This amount of separate money will help to pay the tax when it is due by the end of the tax year. How to Pay Yourself As A Business Owner or Company The usual practice of the company owners is to pay themselves as a salary amount. The process is carried out in the same way as it is in other jobs. In the business book records, the salary amount is added under the details of business expenses. The owner has to pay personal income tax on it as well. It is popular among small businesses and company owners that they withdraw the amount as salary and adjust it in the profits of the company. We get in touch with our expert accountant to obtain information and get a tailored kind of meeting schedule that suits your business requirements.  How Much to Pay Fairly? Once you understand the suitable way to pay yourself for your business as an owner, the next step is to decide how much you must pay yourself. To seek a balance between the what is the requirement of household expenses and what is the need of your business is challenging. Let’s explain this in the following steps: Business Needs Maintain Balance Household Expense Maintain Balance: The negotiable balance between household requirements and business needs is important for your own tranquillity. Don’t try to avoid the give and take policy in the initial stage of your business. Business Needs: There must be enough cash to cover the business needs like reinvestments, expenses, and rainy day funds. A detailed record of the money you owe to others and the due expenses will help to withdraw the right amount of cash. A separate account must have a separate amount of cash for the taxes to avoid haphazard and hard days for your business. In the phase of business disruptions, the amount of around 90 days should be available for the safer side. From a reinvestment perspective, the required amount for the replacement tools, new ideas, or new hirings should be enough. Household Expense: The day to day living expenses come under the household budget. You should not forget to take care of regular expenses as well as the debt repayments and plan for retirement. Final Thoughts Now that you have developed a basic understanding of How to Pay Yourself As A Business Owner, we can sum up the discussion by saying that it will depend on the nature of your business type. However, seeking that balance point between your business needs and household requirements will bring you tranquillity. We hope these few minutes of reading will help to make the right decision for the business and flourish it like never before. However, you can always seek more professional advice as well. Getting our professional advice will simply help you to focus on your business and we will do the rest. Get in touch now! Disclaimer: The information about How to Pay Yourself As A Business Owner provides in this article including the text, graphics, and images is general in nature and does not intend to disregard any professional advice.

Read more