Freelancer asks:
Can be a director of a company and also operate a separate business as a sole trader?
Acumenica answers:
Yes, you can indeed be a sole trader for one business and simultaneously serve as a director for another company. It's crucial, however, to maintain clear separation between the two roles. This means establishing completely separate bank accounts to ensure a transparent trail of income and expenses, particularly important if one business is less financially secure than the other.
It's advisable to avoid any financial intermingling, such as transferring money to the sole trader entity from the company. Such transactions could be subject to Section 455 tax implications for the company and potentially taxed as a Benefit in Kind on the director if viewed as a director's loan.
When it's time to file your self-assessment tax return, make sure to report both the company's salary and dividends as well as the income and expenses from your sole trading activities accurately.
