06:08
Faizan
So you've decided to start a small business and you're ready to get started but how do you start trading your new business?
Here are some things that you will need to consider to get your new business idea off the ground.
Sole Trader or Limited Company?
The first thing to consider is whether you are going to trade as a sole trader or a limited company. The type of small business that you are going to start will largely determine which option that you choose.
A sole trader is a business that is owned by one person (with no staff) who is solely liable for the company's debts and fulfilment of contracts. This type of business tends to be favoured by traditional skilled tradesmen like gardeners, plumbers, decorators, plasterers etc.
The advantages of being a sole trader are:
Having full control over the business.
It is easy to set up as there are fewer regulations to comply with. You will just need to ensure that you contact the Inland Revenue to advise them that you are self employed within 3 months of starting the business.
You won't have to complete a lot of forms unlike limited companies, but you will nevertheless, need to have accounts prepared ready for your annual self assessment tax return to declare annual profits and tax liabilities.
As there are no staff you will keep all of the profits yourself, which can remain private as you will not have to declare them to Companies house.
You will not have to register the company and therefore can be known as anything hence why so many sole traders refer to themselves as "trading as..."
You can build up a more personal rapport with the customer.
It will be cheaper for you as accountants will charge you less as they will only need to complete a profit and loss account for you.
The main disadvantages to this type of company are:
You will be solely liable for any failures or liabilities such as your business failing or property being damaged.
It can be harder to compete with larger companies who have more staff and can therefore complete work quicker.
Here are some things that you will need to consider to get your new business idea off the ground.
Sole Trader or Limited Company?
The first thing to consider is whether you are going to trade as a sole trader or a limited company. The type of small business that you are going to start will largely determine which option that you choose.
A sole trader is a business that is owned by one person (with no staff) who is solely liable for the company's debts and fulfilment of contracts. This type of business tends to be favoured by traditional skilled tradesmen like gardeners, plumbers, decorators, plasterers etc.
The advantages of being a sole trader are:
Having full control over the business.
It is easy to set up as there are fewer regulations to comply with. You will just need to ensure that you contact the Inland Revenue to advise them that you are self employed within 3 months of starting the business.
You won't have to complete a lot of forms unlike limited companies, but you will nevertheless, need to have accounts prepared ready for your annual self assessment tax return to declare annual profits and tax liabilities.
As there are no staff you will keep all of the profits yourself, which can remain private as you will not have to declare them to Companies house.
You will not have to register the company and therefore can be known as anything hence why so many sole traders refer to themselves as "trading as..."
You can build up a more personal rapport with the customer.
It will be cheaper for you as accountants will charge you less as they will only need to complete a profit and loss account for you.
The main disadvantages to this type of company are:
You will be solely liable for any failures or liabilities such as your business failing or property being damaged.
It can be harder to compete with larger companies who have more staff and can therefore complete work quicker.
Posted in: business
