Originally written by Haydn Rogan on Small Business
Being a sole trader means that you run your own business as an individual and are essentially self-employed. This is the most popular way of trading in the UK, with almost 60 per cent of businesses opting for this structure.
By contrast, a limited liability company is a separate legal entity to you, with separate finances.
Each option has its own advantages and disadvantages, and anyone starting out in business will need to decide what will work best for them.
Here, we look at some of the major differences in terms of legal liability, taxes and bureaucracy.
Also see: Should I go sole trader, partnership or limited company?
Liability
A key advantage of a limited company structure is that it ringfences your personal assets. If your business fails or is sued, you will only lose any investment in the business and won’t be personally liable for meeting charges such as litigation costs or damages from your own finances. Although, in some cases, lenders may require personal guarantees.
As a sole trader, you and your business are one single legal entity. You are personally liable for any debts and liabilities you incur in the running of your business, including taxes, putting
Tag Archive for Sole trader
Hot Business News Today
Forming a company: Choose your trading type
by Joanne Harris • • 0 Comments
Originally written by Joanne Harris on Small Business
Choosing to go self-employed is a career goal for many working people in the UK. More money, better hours, and a flexible work-life balance are just some of the reasons many people aspire to work for themselves. But should you become a sole trader, form a limited company or even a partnership? Choosing the right trading type is a crucial early decision.
Although the pandemic has caused issues for all types of businesses, it failed to dampen the nation’s entrepreneurial spirits, with the latest ONS data recording more than 4.3m people still registered as being self-employed as of March 2021.
As vaccinations speed up and lockdown restrictions ease, now could be the time to form the business you’ve been planning to set up over the past year.
However, before you start, it’s important to consider the right company trading type for you.
The way in which you register your business can impact your tax, take-home pay, legal responsibilities, and even personal finances, so it’s vital to look at all the options before you make your choice.
Sole trader
Being a sole trader is the single most popular way of trading as business, with almost 60 per cent of UK
Hot Business News Today
Forming a company: Choose your trading type
by Joanne Harris • • 0 Comments
Originally written by Joanne Harris on Small Business
Choosing to go self-employed is a career goal for many working people in the UK. More money, better hours, and a flexible work-life balance are just some of the reasons many people aspire to work for themselves. But should you become a sole trader, form a limited company or even a partnership? Choosing the right trading type is a crucial early decision.
Although the pandemic has caused issues for all types of businesses, it failed to dampen the nation’s entrepreneurial spirits, with the latest ONS data recording more than 4.3m people still registered as being self-employed as of March 2021.
As vaccinations speed up and lockdown restrictions ease, now could be the time to form the business you’ve been planning to set up over the past year.
However, before you start, it’s important to consider the right company trading type for you.
The way in which you register your business can impact your tax, take-home pay, legal responsibilities, and even personal finances, so it’s vital to look at all the options before you make your choice.
Sole trader
Being a sole trader is the single most popular way of trading as business, with almost 60 per cent of UK
Hot Business News Today
5 most common tax mistakes when you’re self-employed
by Simon Thomas • • 0 Comments
Originally written by Simon Thomas on Small Business
What’s worse when you’re self-employed? Having to pay your tax bill, or making a mistake and finding out you’ve overpaid?
Filing your small business taxes each year does not have to be stressful or painful. Tax can be a bit of a headache for anyone in business, and for the self-employed, it’s no different. The danger of getting taxed wrongly could mean submitting tax returns late, incorrectly, or not at all, leading to some hefty penalties and time-consuming investigations from HMRC.
>See also: How the newly self-employed should navigate the complex SEISS process
However, if you make sure to do little bits of work throughout the year, filing your taxes can be quite straightforward.
5 most common tax mistakes when you’re self-employed
Some stresses are easily avoidable. Make sure to avoid these 5 common tax return mistakes that many self-employed people make:
#1 – Not registering for self-assessment
If you earn more than £1,000 from one or more trades, you must register with HMRC. People commonly confuse this with the basic personal allowance and believe they do not need to register with HMRC unless they earn over a certain threshold.
This, however, isn’t the case.
Everyone is entitled to earn a certain
Hot Business News Today
5 most common tax mistakes when you’re self-employed
by Simon Thomas • • 0 Comments
Originally written by Simon Thomas on Small Business
What’s worse when you’re self-employed? Having to pay your tax bill, or making a mistake and finding out you’ve overpaid?
Filing your small business taxes each year does not have to be stressful or painful. Tax can be a bit of a headache for anyone in business, and for the self-employed, it’s no different. The danger of getting taxed wrongly could mean submitting tax returns late, incorrectly, or not at all, leading to some hefty penalties and time-consuming investigations from HMRC.
>See also: How the newly self-employed should navigate the complex SEISS process
However, if you make sure to do little bits of work throughout the year, filing your taxes can be quite straightforward.
5 most common tax mistakes when you’re self-employed
Some stresses are easily avoidable. Make sure to avoid these 5 common tax return mistakes that many self-employed people make:
#1 – Not registering for self-assessment
If you earn more than £1,000 from one or more trades, you must register with HMRC. People commonly confuse this with the basic personal allowance and believe they do not need to register with HMRC unless they earn over a certain threshold.
This, however, isn’t the case.
Everyone is entitled to earn a certain
Hot Business News Today
What the Uber ruling means for your small business
by Jill Bottomley • • 0 Comments
Originally written by Jill Bottomley on Small Business
Last week’s long-awaited Supreme Court ruling in the Uber case has far reaching ramifications for any small business that engages self-employed individuals, in all sectors.
Drivers, engaged by Uber on a self-employed basis, brought a claim that they were not in fact self-employed; instead, they claimed they were “workers” and were therefore entitled to statutory pay, compliant with the National Minimum Wage (NMW) for all “working” time. Included in the claim were rights to statutory benefits, such as paid holidays.
And the court has ruled in the drivers’ favour, potentially costing Uber up to £20,000 per driver.
Uber’s defence was that its arrangement with drivers was typical of the private hire or “gig-economy” industry.
However the implications of the ruling may extend to any which currently engages self-employed consultants or independent contractors.
>See also: What are the benefits of agile working? – a small business guide
The crux of the issue
Many would imagine that a someone found to be a “worker” in this case would be classed as an employee, not as self-employed. However, confusion on these categorisations is where the crux of the whole issue lies.
A worker is not the same as an employee. The status can best
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Prospect union calls for emergency help for excluded self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Prospect union, recognising the plight of the 3m self-employed excluded from government Covid support, has devised an emergency plan.
Its Self-Employment Stabilisation Scheme (SESS) would bolt onto the existing Self Employment Income Support Scheme (SEISS) and offer help for the millions of Britons who have fallen through the cracks in government support, through no fault of their own.
Reasons for exclusion include being a company director or not having three years’ worth of accounts to submit to HMRC.
>See also: Liverpool launches £9.5m grant fund for ‘excluded’ self-employed
Prospect general secretary Mike Clancy called the Treasury’s treatment of the 3m excluded self-employed “disgraceful”, given how the government has encouraged self-employment and entrepreneurialism in the past.
The SESS would close existing gaps in the SEISS scheme and would introduce sectoral funds in areas with large freelance workforces, such as the creative industries.
In particular, the SESS proposes:
Allowing those who submit tax returns in January 2021 to access the fourth round of SEISS
A Freelancers Fund to support employers in sectors with large freelance workforces (such as creative industries) to take on freelance workers
Allow those who earn less than half their income through self-employment or earn more than £50,000 per annum
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City mayors warn of mental health pandemic among self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Three mayors of England’s biggest cities have written to Rishi Sunak calling him to help the 3m self-employed excluded from Covid business support.
London mayor Sadiq Khan, Manchester mayor Andy Burnham and Liverpool mayor Steve Rotheram have urged the chancellor to help those who have fallen through the cracks of the self-employed income support scheme (SEISS).
Otherwise, warned Mr Burnham, England faces “a mental health pandemic on top of Covid”.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
It is estimated that 10 per cent of the UK workforce have found themselves excluded from Covid-19 support, according to pressure group ExcludedUK.
Mr Burhnam said: “We’re here together to send a message to the chancellor that it’s no exaggeration to say that jobs, homes and marriages are hanging in the balance … this is so wrong on so many levels”.
The Manchester mayor said the government’s cold shoulder for those who have just taken the plunge and gone self-employed, doing just what the government wants, sends the wrong message about becoming an entrepreneur.
Mr Burnham said that there were just days left to get the message across to the chancellor before his government spending
Hot Business News Today
City mayors warn of mental health pandemic among self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Three mayors of England’s biggest cities have written to Rishi Sunak calling him to help the 3m self-employed excluded from Covid business support.
London mayor Sadiq Khan, Manchester mayor Andy Burnham and Liverpool mayor Steve Rotheram have urged the chancellor to help those who have fallen through the cracks of the self-employed income support scheme (SEISS).
Otherwise, warned Mr Burnham, England faces “a mental health pandemic on top of Covid”.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
It is estimated that 10 per cent of the UK workforce have found themselves excluded from Covid-19 support, according to pressure group ExcludedUK.
Mr Burhnam said: “We’re here together to send a message to the chancellor that it’s no exaggeration to say that jobs, homes and marriages are hanging in the balance … this is so wrong on so many levels”.
The Manchester mayor said the government’s cold shoulder for those who have just taken the plunge and gone self-employed, doing just what the government wants, sends the wrong message about becoming an entrepreneur.
Mr Burnham said that there were just days left to get the message across to the chancellor before his government spending
Hot Business News Today
Halt rollout of Making Tax Digital to smallest businesses, urge MPs
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The rollout of Making Tax Digital, HMRC’s rolling scheme for businesses to self-report tax owed, should be halted before it reaches the smallest of businesses.
So says the cross-party public accounts committee in its report on bridging the £31bn tax gap between tax owed and what actually comes into the Treasury’s coffers.
MPs warned that it was unclear whether the controversial rules had achieved their stated aim of reducing tax errors.
>See also: Making Tax Digital bridging software: what is it and how much does it cost?
Since April 2019, VAT-registered businesses and the self-employed people with a turnover in excess of the £85,000 VAT threshold have been forced to use accounting software when they file their returns.
From April 2022, HMRC wants all VAT-registered businesses to adhere to Making Tax Digital. Self-employed people and landlords with a turnover of more than £10,000 will face the extra requirements from 2023.
Critics say the cost of applying the new rules has been unreasonably high. A report by trade body Association of Taxation Technicians found that some small businesses had been forced to spend more than £5,000 on software and training.
>See also: Five steps for small businesses Making Tax Digital
Extending the