If you are running a business and you are thinking about starting another one, you might be wondering whether you need to set up a second legal structure. The good news is that you can run more than one business as a sole trader. There is no limit to how many you can have, and you do not need to register a new business every time you start a new idea.
Let’s break down how it works in practice.
Yes, a sole trader can run multiple businesses
HMRC allows sole traders to operate several different business activities under the same legal status. You keep the same UTR and the same Self Assessment system. What can change is the way you organise your records and the way you present your income on your tax return.
Do you need separate business names?
You can use one trading name for everything or you can choose different names for each business. You do not need to register these names with HMRC. You simply tell HMRC that you are trading as a sole trader and use your preferred trading names for branding, websites and invoices.
If you want extra protection for a business name you can choose to register it as a trademark, although this is optional.
Do you need separate bank accounts?
It is not a legal requirement but it is a very sensible idea. Keeping income and expenses separate for each business makes bookkeeping easier and helps you understand how each one is performing. Mixing everything into one account can make it harder to track profits, plan for tax and keep on top of your cash flow.
Why not try Monzo?
If you would like a simple way to separate money for different businesses and for tax, Monzo can work really well.
Here is the Monzo link, which will deposit £50 into your account. You can then choose Monzo’s Pro plan, which includes six months of Xero for free.
You can set up pots for each business and for your tax savings, so it is easier to see what money is actually available to spend.
How do you handle bookkeeping for multiple sole trader businesses?
Even though you file one Self Assessment tax return, you can keep your records in separate categories or use different bookkeeping systems for each business. Many sole traders use apps like Dext to scan receipts straight into their software. This helps keep everything tidy while saving a lot of admin time.
When it comes to your tax return, HMRC allows you to report different business activities separately. You list the income and expenses for each trade so that your tax is calculated correctly.
Do you pay more tax?
Not necessarily. Having multiple businesses does not increase your tax rate on its own. Your tax is based on your total income from all sole trader activities. If the combined profit pushes you into a higher tax band, then you might pay more, but the structure itself does not create extra tax.
When should you think about forming a limited company instead?
If your profits are growing quickly, or if one of your businesses carries a higher level of risk, you might find that a limited company gives you better protection and possible tax advantages. This is not the case for everyone, so it is worth getting personalised advice before you make a change.
What this means for you?
Yes, you can run multiple businesses as a sole trader. The important part is keeping your records tidy, staying on top of income and expenses and understanding how your combined profit affects your tax. If you would like help setting things up or planning ahead, book a call and we can walk you through the right next steps for your situation.
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