How To Start a Sole Trader Business in 2022
Learn the ins and outs of starting a sole trader company this year
Go Your Own Way
Are you tired of working for others? Do you want to try going your own way and setting up your own business? This article will help you understand the potential advantages, risks, and necessary aspects of starting your own sole trader business.
We will discuss how to start a sole trader business, look into the intricacies of setting up your company, and consider the ins and outs of going your own way.
Definition of a Sole Trader
If you’re running a business as an individual and are self-employed, then you’re a sole trader. In simple terms, if you’re your own boss, you are a sole trader. Of course, there are different types of businesses that can fall into this category, but the bottom line is this – you administer, manage, and work on your own terms.
In the UK, setting up a sole trader business is rather easy and therefore available to many. There are certain criteria you need to meet in order to be able to register, but once they are fulfilled you will gain many benefits and get a chance to thrive as the captain of your own ship.
Sole Trader Requirements
Do you earn over a thousand pounds from working freelance throughout the year? Do you work on a contracted basis and get one-off assignments rather than full-time/part-time periods of employment? If so, becoming a sole trader is for you.
In order to register your business, you will need to provide the HMRC with the following: records of your business’s cash flow (sales and expenses), a self-assessed tax return form, your national insurance number, and your citizenship status details. The process itself does not take long and can be done online without the need for assistance from a third party. It is a matter of providing the necessary information, choosing the business trade name, and calculating the freelance-based income for the present tax year.
The Advantages
What could you gain from registering as a sole trader? The answer will vary depending on the nature of your work, but there is a range of advantages, which most of us can gain from. The major opportunity lies in saving on taxes and gaining the freedom to work for yourself, without the need for external validation. It is an opportunity to grow personally and financially independent of the company’s politics.
When you work for yourself, the sky is the limit when it comes to your earnings. However much you’ll sell, that much you’ll be likely to keep. This is a big opportunity for those who are taxed heavily by their employer’s pay grade range. Moreover, as a sole trader and a small business owner you might be eligible for a tax discount or a full tax return, which would otherwise profit the person in charge of your work.
The Risks
The difficulties of being a freelancer have already been discussed in the previous entries, so instead of reminding you of those, please check out this article for more information. Instead, we would like to bring up the aspect of self-employed work, which might have been omitted in the writing before. Namely, the matter of business administration.
Working for yourself means you’re in charge. It is a great opportunity, but also a great responsibility. After all, it is up to you to administrate your finances, keep track of your assignments, and organise your time. Until you’ve hired an assistant or an accountant to take that burden off your shoulders, you will have to stay on top of things. The most important part is to keep your accounts and finances in order. You must be able to present your income sources, provide proof of work delivery, and organise your paperwork before the tax year ends.
Your Decision
Are you ready to work for yourself? Do you want the freedom of choice and independence? If these appeal to you, then becoming a sole trader might be for you. There is no ‘one size fits all’ approach to business and so you and you alone must make the decision. Think about the potential advantages and disadvantages and choose your approach.
There are, of course, boxes to tick when making such a decision. Consider how likely you are to stay on top of your work, figure out where your potential customers are, and ask yourself whether reaching them and making a sale will bring you a stable income and personal satisfaction. Remember, that there are plenty of free and easy-to-access sources of information and assistance for small business owners like yourself. You can get in touch with a tax advice service, reach out to the HMRC for clarification, or ask your questions on a forum of freelancers, who will certainly be happy to help. The choice is yours, so think it through and take action this year.
Before You Go
If you found this article helpful, check out the one about increasing your income in 2022. And if you’re looking for more freelance work, register on Revolancer today and find your next work!
Freelance marketplace: Revolancer
