Being a sole trader has its advantages, from being your own boss to being able to retain every penny of your business’ post-tax profits.
What’s more, operating as a sole trader means no obligation to prepare annual accounts or submit a Corporation Tax return. It can also help boost your tax efficiency whilst avoiding any complications you may otherwise have experienced surrounding IR35.
Positives aside, however, there are a number of considerations which many people fail to consider properly before taking the leap into business ownership…
- Whilst you’ll be entitled to any profits the business makes, you’ll also have unlimited personal liability for any losses.
- You’ll be personally responsible for any bills the business racks up or any debts it incurs.
- You’ll be personally responsible for keeping accurate and up-to-date records of your business’ income and expenditure.
- In the eyes of the law (and thus your creditors’) there is no separation between you and your business. If your business owes a debt and is unable to pay, your creditors may be entitled to come after your personal assets, including your house even if jointly owned with a third party.
- You’re obliged to complete a self-assessment tax return every year.
Whilst operating as a sole trader can prove hugely beneficial and involve considerably less admin than the limited company route, it’s by no means a walk in the park. It can prove time consuming and, at times, confusing with only the trained or experienced having a firm handle on exactly what’s required.
Why choose Phil Owen & Co.?
A highly respected Liverpool firm of Chartered Accountants, our business start up specialists can support you with everything from the the initial setup to the calculations for the tax due on any profits you receive.
We’ll help you fulfil all sole trader responsibilities, including keeping accurate books, working out your Income Tax and National Insurance payments and the timely submission of your self assessment tax return. And if you need or want to register for and start claiming VAT, we can even help with that too.
Interested? Simply get in touch to arrange a free consultation. We’ll come to you or you can visit us at our Liverpool HQ.