When you first start in business you will probably be the only person working within the business and you'll probably be using your own personal funds to get started. If this is the case then the best form of business for you is a Sole Trader. The sole trader is the most simplest set-up and has very few legal formalities, obligations or constraints when compared to other to other forms of business such as a Limited Company
Advantages
Trading as a sole trader has numerous advantages - you can get up and running straight away and you are able to make changes within your business very quickly as to there is no bureaucracy to deal with.
As with any form of business - you are required to keep accurate records of what you buy and what you sell. But unlike with a Limited Company, you can use your personal bank account to make and receive payments.
Disadvantages
There is a BIG downside with operating as a Sole Trader that you should be aware of. You are fully liable for anything the company does. If you were trading as a Limited Company then you are limiting your liability. As a sole trader there is no limitation on your liability. So if you build up large debts and fail to repay them you could lose your home and possesions.
Once you begin trading as a Sole Trader you must inform the Goverment. You must do this within 3 months of when you start trading.
For more information, download this PDF.