Being a sole trader is the most prevalent way to start a business in the United Kingdom. Starting a business as a sole trader has a variety of benefits that must be weighed against the downsides of the sole trader business model and the benefits of running your company as a limited company.
Control
You don't have to engage other directors or shareholders, consider their viewpoints, or compromise your own vision for the firm as a lone trader, which means you can operate it anyway you want.
Operational flexibility
Adjusting the business to adapt to new conditions can be quick and straightforward because you can make decisions on your own. You can change your pricing structure or the products you offer, for example, by adding new ones or removing those you don't believe in. The capacity to make quick decisions and put them into action can be a huge advantage for a sole trader in Croydon in a competitive, rapidly changing market.
In addition to being the single decision maker, a sole trader will be close to their customers. As a result, they can be sensitive to their clients' needs, attuned to them, and capable of responding quickly and forcefully.
A small organisation, especially one that is dedicated to customer service, may turn off certain customers, particularly those seeking personalised services. This is especially true for local services, where a sole trader's local origins and connections can help generate trust and confidence. In comparison, a limited corporation, even if owned and operated by a single person, may appear “faceless” and “corporate” to some.
Getting started is quick and easy.
While forming a limited company is now easier than ever, starting a business as a sole trader is still the quickest and most simplest way to get your company up and running. There is no requirement to register a business with Companies House, hence no Companies House documents are required to be completed. You must still declare your self-employment and conduct your business as a lone trader to HMRC.
Setup expenditures are minimal.
Many people hire a formation agency or a solicitor to help them start a limited company (although it is possible to do so on your own). These expenditures are at least lowered because expert support is usually not necessary when beginning a business as a lone trader (if not eliminated entirely). There are no fees to pay to Companies House when launching a firm as a sole trader.
In the early phases of your firm, you're also unlikely to need a lot of money to establish and manage it, although this depends a lot on the type of job you'll be doing – in some industries, operational expenditures are large regardless of the legal structure of the company.
Accounting made simple
Although you'll still need to keep track of invoices and expenses, the accounting process for sole traders is significantly less complicated than for limited companies because you won't be required to file formal Annual Accounts or a Corporation Tax Return. You must file a personal Self-Assessment Tax Return as a solitary trader, which will include details about your solo trading profits.
