A recent survey conducted by the Office of National Statistics discovered that self-employed workers were twice as likely to work from home compared to employees.
The increase in people working from home was of course fueled by the COVID-19 pandemic when working from home was mandatory for many workers.
The ability to work from home is ultimately dependent on the sector you operate in, and the preference to do so is both polarising and subjective. Billionaire entrepreneur Elon Musk recently took aim at remote working in the sense that it’s unfair that office-based workers can work from home whereas factory workers, for example, don’t have that option.
He also called out managers that work from home whilst expecting their employees to turn up for work in person as “morally wrong”. In contrast, Richard Branson claims that he has never worked a day in an office.
As a Sole Trader you have the choice to work remotely in certain industries unlike employees who might be mandated to work from the office full time, or a certain number of days per week in a hybrid role.
Having full control is a key reason why the number of Sole Traders in the UK has increased over time. There are now around 3.1m Sole Traders currently operating in the UK which comprises around 56% of UK businesses.
When you operate as a Sole Trader, you have complete control over your business. You answer only to yourself and have full autonomy on all business decisions including strategy, your rates, your working hours and where you work.
Some of the benefits of working from home are obvious for Sole Traders. Remote working means lower overheads as you don’t have to rent office space. You also don’t have to do the daily commute which saves both money and time.
But the Sole Trader advantages don’t stop there so read on for more key Sole Trader benefits.
Increased Flexibility
With more control comes more flexibility and Sole Traders benefit from a high level of flexibility in terms of both how they run their business and how they balance work with their lifestyle. As a Sole Trader you are the business and you don’t need to get approval for key business decisions. You’re accountable only to yourself and this means you can adapt and react quickly to new opportunities or threats.
The freedom is there for Sole Traders to work on their own terms. You can decide your working hours and mould your business around your lifestyle rather than moulting your lifestyle around your work. This enables Sole Traders to achieve a great work/life balance which can only be beneficial.
Connect with your Clients and Customers
As a Sole Trader you deal directly with your clients and customers. This direct line of communication, whether face to face or through phone call or email, enables you to build strong relationships with your customers. This personal service plays a key role in building trust and rapport which will ultimately help you to build a loyal customer base and win repeat business.
Simple and Quick Business Set-Up
When compared with other business structures such as a limited company, setting up as a Sole Trader is relatively simple. You’ll need to register with HMRC for self-assessment and obtain a unique taxpayer reference. You’ll also need to register for your class 2 National Insurance contributions and register for Value Added Tax if your business turnover exceeds £85,000.
The admin requirement for setting up as a Sole Trader is minimal mainly because you don’t have to set up a separate legal entity meaning becoming a Sole Trader is a quick, cost-effective and simple way to set up your own business.
Reduced Regulatory and Statutory Obligations
Another Sole Trader benefit is that they have fewer legal and regulatory obligations than other business structures. Accounting requirements are less stringent as Sole Traders don’t have to prepare and file annual financial statements with Companies House. The tax process is also simpler for Sole Traders and they also don’t have to hold annual general meetings or maintain a statutory register.
Less time spent on regulatory and statutory obligations means more time to spend on growing your business.
Easier Accounting and Bookkeeping
Accounting and bookkeeping requirements for Sole Traders are much less complex than for limited companies. For tax purposes Sole Traders need to track their business income as well as expenses and are taxed on their business profits as a part of their personal tax return. Limited companies, however, would need to pay corporation tax on company profits as well as taxes if dividends are paid to shareholders and company directors.
Protect Your Privacy
Sole Traders benefit from greater privacy than other business structures in respect of personal details being available in the public domain. If you operate through a limited company some information regarding your business will be publicly available through Companies House including the registered address of the business, financial statements and details regarding directors. These disclosure requirements are not applicable to Sole Traders which means there are fewer public records available regarding your business.
It would be remiss not to mention that there are some disadvantages of operating as Sole Trader. As a Sole Trader you are the same legal entity as your business which means you’re personally responsible for any debts that the business incurs. As such, your personal assets such as your home or investments could be at risk from creditors. You also can’t benefit from the same tax advantages that limited companies enjoy.
If you’re planning to become a business owner and set as a Sole Trader, or if you’re a Sole Trader looking for an accountant, our new business team is on hand to help. Call us today on 0330 107 9671 or request a call back here.
