Is operating as a sole trader right for you?

Operating as a sole trader can be very appealing. However, understanding the pros and cons associated with being self-employed is critical before registering with HM Revenue and Customs (HMRC) as a sole trader.

Understanding operating as a sole trader (self-employed individual)

What is a sole trader? It represents a popular style of working which almost anyone who lives in the UK is able to undertake.

More and more people are registering themselves as a sole trader every year, 2013 a record high of people registering themselves as self-employed.

Setting up as a sole trader is a simple, straightforward process. It is important to let HMRC know that you are self-employed as soon as possible, to avoid any penalties.

Once you are registered as self-employed, tax records will be set up for you along with your Self Assessment online account, allowing you to get started on managing your sole trader accounts.

It is important to take your time to decide whether or not you should register as self-employed as there are a series of advantages and disadvantages, which should be assessed carefully before moving forward to register and operate as a sole trader. Futurelink can advise you on how to register as a sole trader or limited company.

What are the benefits of operating as a sole trader?

Being self-employed includes a series of advantages, these consist of:

  • Freedom to choose your own tasks
  • Choose your work schedule
  • Work at own pace
  • Increased job satisfaction

In addition, a sole trader can keep all the profit after paying income tax and National Insurance contributions and make his or her own decision regarding salary ranges, business expenses, and debt.

Many self-employed individuals enlist the help of specialists to manage their sole trader accounts to make sure they’re making the most of their income.

Self-employed people also have unlimited liability. This means that they can obtain credit easily because creditors are more willing to lend to them compared to other business entities.

What are the disadvantages of operating as a sole trader?

The disadvantages of operating as a sole trader include:

  • Inconsistency of income
  • You could ensure long working hours
  • Uncertainty about the future
  • Legal responsibilities such as paying National Insurance, taxes and managing your sole trader accounts
  • No company benefits such as holidays, sick pay and pension schemes

Self-employment takes people on a steep learning curve that can be truly challenging, but the rewards can be exceptional if successful.

How can I succeed as a self-employed contractor?

There are various skills and educational requirements that may be necessary for you to succeed as a contractor. This alters depending on the industry you are working in.

However, there are a few common skills required. These are:

  • Commitment
  • Initiative
  • The ability to work on your own
  • A focus to achieve set goals
  • Good decision making skills
  • The ability to work under pressure
  • The ability to take necessary risks
  • Good negotiation skills
  • Good networking skills
  • Leadership skills
  • Project management skills

If you are thinking about registering as a sole trader and not sure if it’s the right choice for you, give us a call on +44 (0)1923 277 900, we’ll be happy to help.

We’d be happy to answer any questions and provide you with advice on how to get started, operating as a sole trader and how our sole trader solutions can help with our compliant contractor solutions.

 

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William Cadden, Self-Employed Contractor

“For me, Futurelink Group was the best solution, as a foreign and a lack of knowledge of the UK rules, they were extremely helpful in all aspects. Always fast in answering all my questions. I almost didn’t do anything and they put me on track to invoice and receive my payments. I can fully recommend them.”

Ronaldo, Umbrella PAYE contractor

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Michelle Hughes, WS Contractors Ltd

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