Chris Thorpe outlines some of the factors to consider when choosing how to operate a business.
When operating a business or deciding how to operate one, there are several ways that a business can be operated.
Sole trader and partnership
A sole trader is the simplest model – the one-man band, with the individual and business being one and the same. In this case, the individual is taxed on their profits as earned income at their marginal income tax rate, irrespective of what is drawn. There are no accounts to file, nothing to tell Companies House, no dividends or salary to declare – all they need to do is tell HMRC and file a self-assessment tax return. From 2026, a turnover of £50,000+ will require taxpayers to file those returns through Making Tax Digital. From 2027, a turnover of £30,000 will attract such an obligation.
A partnership
