An increasing number of people today are opting for self-employment over working for someone else. If you decide to set up your own business, one important decision you need to make is whether or not to register as a sole trader. We look at the pros and cons for your business.
Advantages of Being a Sole Trader
If you have your own business, you probably appreciate the freedom this gives you. Rather than working towards someone else’s goals, you have total control over how you run your business.
According to the Office for National Statistics, there was a rise from 3.3 million self-employed people in 2001 to 4.8 million in 2017.
Another benefit of being a sole trader is that all your profits are yours alone, and you do not have to pay shareholders or split your profit. If you need help, you can employ contractors who will be responsible for their own tax contributions. Whether your business is in Oxford or Cheltenham accountants are important, and you need to ensure you have the advice you need.
Depending on your business, the personal touch may be important to your customers, and your personality and reputation can attract clients. The more corporate image presented by a limited company could be seen as off-putting to some potential clients.
There is always the opportunity to change your mind if a few years down the line you decide you need to register as a limited company. It is very important to contact a reputable firm of accountants such as https://www.randall-payne.co.uk/ to support you in important business decisions like this, as there will be an increased amount of paperwork and you will need to pay tax differently. However, you may find you make tax savings if you register as a limited company.
Disadvantages of Being a Sole Trader
There are also some disadvantages to being a sole trader to consider before you make a decision. One downside is that if your business gets into debt, you will be personally liable, so you need to ensure your finances are secure.
Decision-making can become more challenging as your business grows, and obtaining professional advice can become expensive.
A further disadvantage is that it may be difficult to borrow from a bank or raise funds from other sources for your business.