Top Tips For Starting A Sole Trader Business
Updated: Feb 3
It can be daunting starting a new business, especially when you have no-one else to bounce ideas around with.
There will many questions you will have depending on the industry you choose to supply in.
Here are some tips (with useful links in the text) on how to go about starting business as a sole trader:
You must register as self-employed no later than the 5th October after the end of the tax year in which you became self-employed. For example, if you started your business in July 2021, you would need to register with HMRC by the 5th October 2022.
Set up a business bank account. As a sole trader you are not legally required to open up a business account, but trust me, keeping your business transactions separate from your personal will make your life a lot simpler.
Register with the ICO (Information Office Commission Officer).
Choose an online Cloud Accounting Platform. This will not only make it a lot easier to keep track of your business transactions but when done well will give you a fantastic insight into your business growth and help you to keep track of customer and supplier payments more easily. On a side note it is worth remembering the compliance dates for MTD (Making Tax Digital). Weather you are VAT registered or not, as a sole trader, the latest date you must be MTD (Making Tax Digital) compliant is currently April 2024. But by choosing an online accounting platform at the start means you are more prepared and less likely to fall foul of any penalties that may arise from not registering on time.
Insurance - you will need some kind of business insurance and the type and cover you need will be very dependant on the industry you are in.
Choose a business name.
Set up a website - customers like to see an online presence, having a website can make you appear more professional.
Decide on a logo - have fun with this or hire a professional.
Create invoice/letter templates ready to send to your customers. You can create the invoice templates on your accounting software!
Keep copies of all your business receipts - these can be saved on to your laptop in a secure place and uploaded to your accounting software.
Advertise - think about where your customers are. Are they on Instagram, or Facebook or perhaps LinkedIn? Think about the age demographic, geographical and age of your customers you want to aim for. All of these answers will help you decide on the best form advertisement/marketing. If you choose Facebook I have personally found joining local business groups invaluable for growth.
Network - as a sole trader it can be hard not to have anyone to talk business with. I have found Networking events to useful for ideas, support and leads. There are a lot of online Networks out now too.
Keep an eye on your turnover (sales). If it looks like you are about to exceed the VAT registration threshold of £85,000 in any 12 month rolling period you must legally register for VAT. You can easily track this either by using a spreadsheet or simply by running a report on your accounting software.
Put taxes aside - please do not forget to put a minimum of 30% of your profits aside to pay HMRC. The 30% is based on a low income earner paying a rate of 20% tax and 9% NIC. If you are earning much more, then well done, but ensure you put more aside so it isn't a shock when you get the bill.
If you would like a professional to help you with accounting software set up or ongoing bookkeeping please get in touch - 07903364040