Be Your Own Boss and Take Control
There are a record number of sole traders in the UK. What is the attraction and why should you join them?
The latest numbers to come from the Office of National Statistics say that almost five million people in the UK are self employed – that equates to a remarkable 15 percent of the workforce. There are a whole host of drivers that have brought about this “age of the entrepreneur.” Technology is one, in that setting up an online business usually requires far less investment than launching a physical one, and the general malaise in the broader economy over the past decade is another.
Pragmatic reasons like these are well and good, but there is also the simple fact that being your own boss and having the power to control your own destiny are highly attractive concepts.
In short, people start off on their own for any number of reasons. But one of the first decisions they have to make is how to structure their new business. This is a question that the team at Linda Carr Accountants are asked every day by aspiring Richard Bransons, and in the majority of cases, the answer is to set up as a sole trader. There are other options for those setting up on their own, but usually, sole trader makes the most sense. In essence, it means you are the business, and you own it and any assets or liabilities it might have. To be recognised as a sole trader you need to register with HMRC as self-employed.
Beholden to nobody
As a sole trader, you get to call the shots. The direction the business takes, the marketing strategy it adopts, even the hours it operates each day are down to you and nobody else. It is a powerful incentive, particularly for those who have spent years as a “corporate drone” in the world of paid employment.
Reaping the rewards
The other great thing about being a sole trader is that the financial rewards of all your hard work are yours and nobody else’s – after tax, of course! There are no shareholders waiting for their cut and no staff asking about their national insurance contributions. In the event that you need occasional support, you can always employ contractors as and when necessary. But as these are also self employed, you are not liable for sick pay, national insurance and so on.
Go your own way
Some people set up a business with the aim of making it into an empire that will generate millions, and are prepared to work crazy hours to make it happen. If that applies to you, then good luck with it – but such an attitude is not a prerequisite. Today, there is a great appreciation for the work / life balance. If the objective of your business is for you to keep food on the table by working 20 hours a week as and when you please, then that is fine too.
Is there a downside?
There are pros and cons to most things in life. As a sole trader, there is no safety net – if you don’t make the business work, you won’t earn any money. Also, keep in mind that the business is seen as an extension of you. So if it runs into financial trouble, your personal assets could be at risk.