Not yet registered? Create a OverBlog!

Create my blog

How to set up a business as a sole proprietor

A sole proprietor or sole trader is a person who sets up a business on his own. The most common types of sole traders are those who work freelance. The process of setting up a sole tradership is very simple - registering the business is not compulsory. In this article, find out how to set up a business as a sole proprietor.

How to set up as a sole trader

If you have a business idea and you do not intend on employing any staff, then a sole tradership is perhaps the best way of setting up your business. Many freelance workers set up as sole traders as a significant proportion of them work from home. Inform the HMRC However, when you are a sole trader, you are responsible for paying your own tax and national insurance, and you must inform the HMRC that you are working in a self-employed capacity, even if you are also working full or part-time whilst you set up your business. When your details have been registered with the HMRC, you will have to set up a direct debit for your national insurance and will be required to fill in an annual self-assessment tax return.
Responsible for debt Perhaps, the only significant problem with a sole proprietorship business is that you are responsible for the debt. Therefore, if your business gets into difficulty, personal assets such as property and contents can be seized to recover the costs of the debt.

Advantages

- Keeping records is relatively straightforward as with a sole tradership, it is unlikely that significant sums of money will be spent on the business. - You do not have to pay any registration fees for registering a business name. - If you work from home, you will have little or no overheads. - All the profits that you make are your own. You are free to make all of the decisions about the business, from finance to marketing and advertising. Checklist for being a successful sole trader - Keep your records up-to-date. Spend a day or an afternoon a week getting your books up-to-date. - Log every expense and outgoing accurately. - Use a spreadsheet to work out your costs. - By using a cash flow template you can ascertain which are your most expensive purchases, and identify whether your outgoing money is more or less than your incoming money.

Same category articles Business development

When should I start a home based business?

When should I start a home based business?

There is no right or wrong time to start a home based business. However, it does depend on how much time you have for setting it up, and your availability of finance. Internet businesses, in particular, are relatively cheap to set up and there are many ideas for new businesses on the Internet.
Things to look for when buying a small business

Things to look for when buying a small business

When buying a small business, it is important to carefully examine the business's pros and cons in order to have better judgement and to make a more informed decision. Below are some of the things that you should look at when buying small businesses.
A guide to understanding management concepts

A guide to understanding management concepts

Management is the process of controlling and dealing with people, companies or organisations. Management may sound easy but it requires the understanding of management functions in order to be a successful manager. It also calls for the understanding of concepts of strategic management and project management, among others.