Becoming a sole trader is the simplest way to get started in business. It is the most basic form of business structure and it is also relatively easy and inexpensive to start and maintain.
Many sole traders choose to trade using their own name by registering as a Self-employed entity with the Income Tax Office and Employment Service. It is also possible to trade under a Business Name by registering one via Companies House prior to registering as Self-employed. Once registered, sole traders can commence trading, subject to complying with the requisite licensing obligations (any business wishing to trade or provide a service in Gibraltar will need to obtain a business licence). Sole traders are taxed as individuals and pay income tax at personal tax rates. Any business income, deductions, gains or losses must be declared on the annual personal tax return form.
Sole traders retain complete control over the affairs of their business, including all assets and earnings. However, sole traders have unlimited liability and are consequently personally responsible for any losses their businesses may incur. It may also be harder to secure finance if registered as a sole trader. Nonetheless, there are a number of funding sources available, ranging from personal savings and business loans to EU Funding and Tax Relief (if eligible).