A sole trader is someone who operates his or her own business. Sole traders or self employed individuals have contributed a great deal in the growth of the business sector in UK continually since 2000.
If you’re aspiring to be a sole trader yourself, you must take into consideration that being a sole trader comes with important responsibilities.
As a sole trader, here are some of your key responsibilities:
You must register yourself as a sole trader. You must register to HM Customs & Revenues or HMRC as self-employed. Doing this is relatively easy. You may just give their helpline a call or simply accomplish an online form from them. Registration as self-employed must be done within three months from the start of trading. Otherwise, you would have to pay a penalty for not meeting the deadline for registration.
You should check if you need to pay National Insurance Contribution (NIC) and Value Added Tax (VAT) and how much you need to pay. Determining whether you need to pay NICs and VATs will depend on your annual income from your business.
You would have to manage your employees’ NICs as well as income tax returns and forward it to HMRC. You have to prepare a special payment system for this.
You should ensure proper documentation of your financial records. Keeping a detailed record of your finances, expenses, and everything related to your business’s funds is necessary once you become a sole trader. On the other hand, you may also opt to employ an accountant or bookkeeper instead.
You should be ready to multitask and perform many jobs. When you’re just starting your own business and don’t have employees yet, you will have to accomplish many roles such as being the manager, accountant, marketer, customer service representative, as well as hiring specialist. You must be able to do these jobs well.
You must be able to manage your time effectively. Just as with being able to do different jobs, you must also learn to manage your time so you can attend to the needs of your business promptly.
Managing your own business is a big task. Just be patient and continue doing these responsibilities. You’ll eventually realise that every effort you put into being a diligent sole trader will pay off.