Becoming A Sole Trader – The Advantages
Annual statistics released by the UK Parliment showed that the rise of small businesses has grown at the highest rate in history over the last 5 years. Starting your own business as a sole trader is very attractive for many people in the UK – are you considering it?
A Sole Trader (also known as a sole proprietor) is a person who is the exclusive owner of their own business. They are entitled to keep all the business profits after tax has been paid as well as being liable for all losses within the business.
Below we have listed 7 main advantages of becoming a sole trader.
Complete control of the business
Being a sole trader means that you have control over all decisions within your business. This is perhaps the most common reason why people start up their own business; to be “your own boss”.
If you have any ideas or choices that you need to make for your business, you are able to action them as you wish. This is without the need for you to discuss and consult with the shareholders of the business.
Flexibility of hours
As a sole proprietor, you have the ability to work your own hours as well as taking your own holidays. Depending on the type of service or good your business provides, this benefits some more than others.
Accounting process is simple
Business accounts can typically be very difficult, in the sense that everything needs to be done by the book and accounted properly. The larger the business, the more difficult the accounting process becomes.
For sole traders, the accounting process is much simpler. Although, you still need to maintain records for your invoices, business expenses and submit a personal self-assessment tax return; this is standard and costs a lot less time to administrate as it is only for one person.
Being the sole owner of the business, all the profits and assets of the business are own by you. This means that you will typically not have a set income month on month. This can be both an advantage as well as a disadvantage depending on the success of the business.
As already mentioned within the “complete control” section of this article, being a sole trader allows you to be the only decision maker in the business. It makes changes within the business ‘quick and simple’. It means you are able to adapt to change faster than a larger business that has to consult with all shareholders and pass through the ‘red tape’.
Sole Trader Privacy
You may or may not know this, but lots of information about limited companies are made public once registered with companies house. However, sole trader information is kept private. The reason this is an advantage is that it means your competitors will have less information on your business, making it harder to understand the secret to your business’ success.
It is common that a large business has to react to their competitors and customers, meaning that the original business model has to completely change. However, smaller businesses have the ability to stay specialised in their specific area.
Having the ability to make swift decisions and then implement them quickly is a key advantage for a sole proprietor in a competitive and fast moving market.
We can help manage your accounts at Stonehouse
At Stonehouse we specialise in working with small and medium-sized businesses – our expert team have comprehensive experience as well as the knowledge prescribed to help your company overcome challenges.
Give us a call on 01733 265 888 if you want guidance or advice for helping your business grow.