Advantages of being a sole trader
Being a sole trader is the most common way to operate as a self-employed professional. A recent government study found that there are over 3.5 million sole traders – making up a whopping 59% of the total businesses in the UK.
There are plenty of advantages to being a sole trader. We have summarised the most popular reasons people choose to be a sole trader below.
It’s simple to test the waters (being a sole trader) – while maintaining a full-time job
It’s reasonable of us to say that a majority of self-employed professionals have no regrets (we’ve spoken to many who said the decision was the best they’ve ever made). However, they will all acknowledge what a difficult decision it was to part ways from a full-time position. To make the swap as easy and risk-free as possible, have you considered doing some sole trader work in the evening or weekends – whilst you still have a 9:00 – 17:00 permanent role? It may be a wonderful way to give sole trading a try and build up a client base. We understand that not everybody is in the position to do this because it requires a lot of free time. However, if you can do it – we recommend you give it a go. However, make sure you don’t do anything that’ll upset your employer because there may be something about taking on additional work in your contract.
It’s straightforward to set up as a sole trader
Setting up as a sole trader isn’t difficult, and it doesn’t take long. All you need to do to get going is let HMRC know that you will be paying tax by completing a self-assessment tax return.
To register for self-assessment, visit the government’s website and follow the instructions. It shouldn’t take much longer than half an hour to be successfully registered.
Better work/life balance
Being a sole trader means you are your own boss. Therefore, you are free to make crucial decisions, such as when you work and when you take time off. One of the most common “attractions” of self-employment is the so-called improvement of “work/life balance”, but this is an essential factor to take on board. Providing business is going well, you are free to choose when you work, and you have control over your working hours. This is a significant reason people decide to become sole traders/self-employed. However, make sure you don’t accidentally end up working more than you should.
Setting up as a sole trader can be done on the cheap
This completely depends on your area of expertise, but in many cases, setting up as a sole trader isn’t expensive because equipment purchases can be kept to a minimum. You can also get started quickly and start purchasing materials along the way.
In terms of setting up the company as a legal entity – this is low-cost compared to other potential ventures. Registering for self-assessment is free on the HMRC website, and ongoing costs are likely lower than a limited company. For example, if you engaged with an accountant as a sole trader, they’d have less to do than a limited company client, and therefore their costs will be lower.