How does a Sole Trader get paid?


A Sole Trader you:

  • do not get ‘paid’ as such – rather, a Sole Trader can extract profits from the business (profits being sales less expense and tax).
  • don’t have to extract all profits from your business – you can choose to reinvest it or keep it as ‘working capital’ i.e. money for your till.
  • are taxed on your all your profits regardless of whether or not you actually withdrew cash from your business bank account for personal use.

So to pay yourself as a Sole Trader all you really need to do is withdraw cash (called ‘drawings’) from your business bank account.

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Mark Sweetman, ACA

Mark Sweetman, ACA

As a Chartered Accountant I've built my experience working within the SaaS and digital technology industries, growing early-stage businesses from the inside. I help digital entrepreneurs understand their companies and ensure they have all the tools they require to succeed and thrive. I love adopting new tech solutions and making use of these to increase efficiency within our clients' businesses.