Seven Reasons To Start As A Sole Trader

Thinking of starting a business but don’t want a mountain of paperwork? For many freelancers and one-person outfits, going solo as a sole trader remains the simplest route. Running your business alone gives you total control — no board to answer to and no need to clear every decision with others. That freedom lets you pick projects, set hours and give customers a personal touch that bigger firms often can’t match. Setting up is straightforward. You simply register as self-employed with HMRC and, once any required licences are in place, you can begin trading. That contrasts with limited companies, which face more compliance and formal filings with Companies House. Privacy is another clear plus. Unlike directors of limited companies, sole traders don’t have to publish details such as accounts or director information on Companies House. Taxpayer confidentiality rules mean your finances aren’t on public display, which many owners prefer. Less red tape usually means less admin and lower costs. Registering as self-employed is free; forming a limited company typically costs between £12 and £40 depending on the method. And if you suffer losses early on — common for start-ups — sole traders can sometimes carry those losses back against prior income to secure a tax refund, subject to limits and rules that apply in the first years of trading. Financially, sole traders keep all post-tax profits rather than sharing with shareholders, and the structure can be more straightforward to sell. Buyers of a sole trader business typically purchase assets, which many find simpler than buying company shares that can bring hidden liabilities. Switching structures is relatively flexible. Moving from sole trader to a limited company can be done online through Companies House, often quickly. Reversing from a company to sole trader, or winding down a business, requires settling liabilities and dealing with assets — different processes but possible. When to switch? Many advisers say incorporation becomes more common as profits grow — often when annual profits move into the tens of thousands. But for many professionals and small-scale operators, the simplicity and lower scrutiny of sole trader status continue to suit their goals. To keep things tidy, there are accounting tools aimed at sole traders — from free plans that handle receipts and Self Assessment forms to paid apps offering invoicing, reconciliation and tax ring-fencing — making solo life easier to manage. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://smallbusiness.co.uk | Read original article