Starting as a Sole Trader
When I first started my own business, it was really exciting but also a bit scary. Being a sole trader means you’re the only owner and make all the decisions. But, you also have to figure out a lot of things by yourself, like what kind of insurance you need, how to handle your business money, and make sure you’re not paying too much tax.
Good Things About Being a Sole Trader
1. Easy to Start
Starting as a sole trader is straightforward. You just need to register your business, and you’re ready to go. There’s not much fuss about it.
2. You’re the Boss
You have the final say in everything about your business. This means you can quickly make decisions and change things if you need to.
3. Keep Things Private
Your business details and how much money you make are kept private, which is not the case with big companies.
4. Tax Benefits
The money your business makes is treated as your income, which can sometimes mean you pay less tax than bigger companies.
5. Feeling Proud
There’s a great feeling of achievement in running your own business and seeing your hard work pay off.
Not So Good Things About Being a Sole Trader
1. Unlimited Liability
If your business gets into trouble, your personal stuff like your house or car could be at risk to pay off any debts.
2. Financial Responsibility
It’s all on you to handle the money. Getting loans can be harder, and if the business loses money, it’s your loss.
3. Hard Work
Running a business alone can mean very long hours, and it might be tough to find time for yourself or your family.
4. Growing the Business
It can be hard to make your business bigger on your own. You might need more money or people to help, which isn’t always easy to get.
5. What If Something Happens to You?
If you decide to stop working or something happens to you, the business might have to close because it depends so much on you.
The Insurance You Need
Getting the right insurance is super important. Here’s what I learned:
- Public Liability Insurance: This is a must-have. It means if someone gets hurt or their stuff gets damaged because of your business, you’re covered.
- Professional Indemnity Insurance: If you give advice or a service, this one’s important. It protects you if someone says your advice was bad and they lost money because of it.
- Product Liability Insurance: If you sell things, you need this. It covers you if something you sell hurts someone or breaks their stuff.
- Business Equipment Insurance: This keeps your work tools safe. If they get stolen or broken, you won’t lose all your money replacing them.
Claiming Expenses
One good thing about running your own business is you can claim expenses. This means some of the money you spend on your business doesn’t get taxed. You can claim things like:
- Office stuff: Like paper or your phone bills.
- Travel: If you have to go somewhere for work, like driving or catching a train.
- Work clothes: Only if they’re special ones you only wear for work.
- Paying people: If you have anyone helping you, their pay can be claimed too.
How Much Tax?
Figuring out tax was tricky. You pay tax on the money your business makes. In the UK, there’s a certain amount you can earn before you start paying tax, and then it goes up the more you earn. You also have to pay National Insurance, which is another type of tax. I had to learn to save some money for tax so I wasn’t surprised at the end of the year.
Health Insurance
At first, I didn’t think about health insurance. But being sick when you run your own business means you can’t work, and if you can’t work, you don’t make money. Getting health insurance was a smart move because it meant I could get better quicker and not worry about losing money if I was ill.
Wrapping Up
Starting my own business as a sole trader has been a big adventure. It’s not just about doing the work. You have to think about insurance, saving on taxes, and making sure you’re covered if you get sick. It’s a lot, but for me, it’s been worth it. I’ve learned so much and even though it’s been hard work, I’m proud of what I’ve built.
