Sole trader and distinct trades

[sarah27]

Background

I called the HMRC today with the following question:

If, as a sole trader, I want to engage in several distinct business trades (e.g. gardening, cleaning, writing), can I operate these distinct business trades under one business name, or do I need separate business names for these different trades?

The lady put me on hold and got back to me, saying that the different trades need different business names.

I then asked whether I need to setup distinct business bank accounts for these distinct trades.

She said no. You can operate distinct trades from the same business bank account.

Question: How does this work in practice?

Suppose I setup a generic sounding business bank account name to handle the distinct trades. E.g.

"Sarah J trading as SJ Services"

What do I do when invoicing Person 1 for Gardening Services and Person 2 for Cleaning Services? Can I just put "Sarah J trading as SJ Services"? But according to HMRC, I have to use different business names for these distinct trades. So would I put it as

"Sarah J trading as SJ Services trading as SJ Gardening"??

 

[Scalloway]

I do the accounts for a sole trader who has two separate trades. He has one set of invoice numbers and one bank account for them both. However when I do his tax return I complete two sets of Self Employment pages, one for each trade. In 20 years there have been no queries from HMRC.

 

[Anna Chandley]

I think the HMRC advice is wrong.

You could trade under your own name and not use a trading name at all in which case you could have 3 different trades all under one name. The short form employment pages don't even ask for a business name at all only a business description.

You might also consider whether it would be easier to have the business account in your own name with all customers making payments to your name regardless of which trading name you use.

Anna

 

[sarah27]

I think the HMRC advice is wrong.

You could trade under your own name and not use a trading name at all in which case you could have 3 different trades all under one name. The short form employment pages don't even ask for a business name at all only a business description.

You might also consider whether it would be easier to have the business account in your own name with all customers making payments to your name regardless of which trading name you use.

Anna

I was thinking the same thing: sole traders can trade under their personal name alone, and not have a business name, so why the need for distinct trades to have distinct business names? Seems arbitrary at best, illogical at worst. The lady who answered my call did take some time getting back to me. She might well have been mistaken.

I definitely want to have a "Sarah J trading as SJ Services" (or something of that kind), as it sounds more professional than just trading with my personal name alone.

 

[sarah27]

I do the accounts for a sole trader who has two separate trades. He has one set of invoice numbers and one bank account for them both. However when I do his tax return I complete two sets of Self Employment pages, one for each trade. In 20 years there have been no queries from HMRC.

That's a really good idea - have different sets of invoice numbers for each trade (invoices A-NNNNN, invoices B-NNNN etc).

Yes, Anna Chandley kindly pointed out the same thing in a different thread: sole traders engaging in two or more distinct trades just need to return one tax form, but complete different sets of pages for each trade.

Can you remember how your client invoiced the two separate trades - i.e. did he use the same business name for each? If so, I suspect the person I spoke to on the phone was mistaken in advising that distinct trades require distinct business names.

 

[Scalloway]

The client uses NCR preprinted invoice books with his own name, the same book for both trades. When I do his tax return one set of Self Employed pages with Trade 1 as description of business on one set and Trade 2 on the other.

 

[sarah27]

The client uses NCR preprinted invoice books with his own name, the same book for both trades. When I do his tax return one set of Self Employed pages with Trade 1 as description of business on one set and Trade 2 on the other.

Great. So just to confirm, you complete two SA103Fs (self-employment (Full) forms) for both trades, and you left business name blank on both forms (as he's trading under his own name)?

 

[sarah27]

Makes one wonder what constitutes distinct trade. Maybe I should just concentrate my self-employment efforts on activities that can be categorized under one trade. After all, probably a variety of different services and products can be legitimately categorized under a given trade.

 

[Scalloway]

Great. So just to confirm, you complete two SA103Fs (self-employment (Full) forms) for both trades, and you left business name blank on both forms (as he's trading under his own name)?

That is correct