Member Offer
  1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Becoming a Sole Trader - Questions

Discussion in 'General Business Forum:' started by richimgd, Oct 14, 2011.

  1. richimgd

    richimgd Member

    Hi everyone,

    I have a few questions about becoming a sole trader, I'm sure some of you on here have done this before.

    • Business Account - In my name or a custom 'business' name? Can this be changed later?
    • Is being a sole trader permanent for any length of time or can I change my status back easily?
    • Is there any ongoing costs associated with being a sole trader – how much do business accounts normally cost? I know often I see 'free business banking for 2 years' but was wondering what the regular price was for a typical business account.
    • How much would a basic accountant cost to begin with? If I would even need one? Hours per month can vary from 0 to 50+. Often I will have no work on at all, but other times I will have a steady stream of work.
    • Is business insurance / personal liability insurance required for working from home?

  2. Levi

    Levi Moderator Staff Member

    1) mines my name trading as company name. I've got 2 actually - one is for 'income' and one is for 'taxes' just so I don't spend it and can keep business away from personal.
    2) technically all soletraders are single person freelancers businesses - is this what you mean by the question?
    3) 5-10 a month depending on bank, some give free if you put in over 1000 a month every month
    4) no idea, never bothered with one as I can't exactly go far wrong with my accounts lol
    5) depends on how likely you're going to need it, it's not that cheap in my experience. I haven't got it although I do have health insurance in case of illness etc.
  3. richimgd

    richimgd Member

    1) Sounds good, didn't think of one for tax also - good idea!
    2) Not sure what I mean by this as I don't know if there would be an issue to address or not. I guess if I end up not doing any freelance work later and decide I have other commitments could I change my 'status' so that I don't have to do any business tasks such as tax returns etc?
    3) Do you mean it would cost around £5-10 per month for a business account unless you pay over about £1000 per month?
    4) No worries. I thought I could eventually get tax deductions on things like computer equipment and other items as it would be for business use. Not sure if I could do this without the advice from an accountant, but then I don't know how much an accountant would cost and if it would be worth it since the amount of freelance work I would be doing wont be huge since I am already in full time employment.
    5) I'm thinking I wont need it as I would be working from home all the time and probably not having client visits, although it might be something to consider if I will eventually be visit clients of business'.

    Cheers for the advice
  4. Levi

    Levi Moderator Staff Member

    2) not sure, always had freelance work to fill in on accounts so to speak. I'd actually suggest going in and speaking to your banks (always go talk to them first as you obviously trust them and they may be more willing to give out info etc as you have an account with them) business advisers regarding what options are available and what they would suggest.
    3) depends on banks, some charge a monthly fee for things like statements (and basically having an account with them) which to be honest seems like a rip off but it's how banks make their money. Some others have these charges 'removed' if you pay in £1000 a month as I assume they can make money from the interest etc
    4) You can get deductions on hardware, software, fuel, electric etc, we've got a thread on it here somewhere (search capital allowances) where we've covered it.
    5) there's another aspect which liability insurance covers and that's if a client sues you for unfinished work etc. I've tried to cover myself in t&c's to cover things like electricity failing, medical issues, acts of god etc but there's still a risk which, for how much I'd need to pay out on insurance, I'm willing to take as I'm on good terms with all my clients etc and they understand that some things just can't be predicted in advance (longer render than expected due to material choices for example).
  5. 1) My business account is in my personal name as I hadn't decided on a trading name at the time. I'm with Santander and it's relatively easy to change to a trading name after the asccount has been opened. Apparently.

    2) I've known other sole-traders who have then returned to PAYE (as an employee) after a stint of self employment to have had to file tax returns declaring their self employment income, even though it was nil. Not sure if this is always the case or a bad experience. I'd say if you're going self employed make sure it's what you want to do long term!

    3) Santander offer free business banking. I bank with them, and only use the account for paying in and out. I get a monthly paper statement showing income and expenditure, but am not able to visit a branch and phone banking is limited. I service my account online which is fine for me. I've heard of some bad stories with them but the service has been fine for what I need it for.

    4) My bookkeeper (there's a difference between that and an accountant...) would charge about £300 to bookkeep and do my tax return each year. But... she is awesome and has pointed out financial things I wouldn't have known and therefore has saved me a bit of money.

    5) No idea. Insurance is something I will be looking at; for sickness/accident cover, protection in case of an unhappy client who tries to sue, or injury in my own workplace (home or rented desk) or at a client's premises. Accidents do happen!

    Thanks for the post though, you've reminded me to add more stiff to To Do list!
  6. Levi

    Levi Moderator Staff Member

    Are you saying it's basically an online account with no access to a 'human being' if you walk into one of their banks, even if you want to pay money over the counter?

    I can't say I use the business 'adviser' (they do no different to the 'joe public' people downstairs lol) at my bank but it's nice to know there's someone there if something does get screwed up.
  7. jungledrum

    jungledrum Member

    i need to get all this sorted, some good points here
  8. Levi, pretty much. You can't conduct business in-branch, but their phone assistance is pretty good (no long holds, and the call centre staff are based in my own city of Glasgow, so accents aren't a problem. I can't garuantee this for the rest of the UK though ;) )

    I'm sure if I needed extra services they'd oblige.
  9. richimgd

    richimgd Member

    Cheers for the posts guys.

    2) Already got a contact who I am chasing up. I'm with Natwest bank so will see if they can offer something suitable, if not I will shop around. Just trying to get a few pointers on here so I know what to look out for.

    3) I think for now I will try and take advantage of one of the '2 years free business banking' offers. I was just trying to figure out what typical accounts could cost. Much of the time I will not be paying in over £1000 per month. Maybe I could jump to a new bank offering a similar 2 year free banking deal every 2 years to escape costs...

    4) I'll have to dig out that thread as I need to really maximise the benefits of being a sole trader.

    5) I guess this is something to consider.

    1) I might do something similar as I don't think I will be changing my name any time soon, although my business might be subject name to change!

    2) Well, it wouldst be solely self employed as such since for 40+ hours per week I will be working at my primary job. It's only additional outside work that I will do under my own freelance / sole trader business status. I think I will always be on the look out for extra work, but the amount I can take on is limited since I already work full time. To be honest I don't think I will totally ditch the freelance work any time soon since any opportunity to earn more money can only be a good thing.

    3) Fair enough - I will see what my bank Natwest can offer me and then perhaps I will shop around.

    4) I might attempt to do my own books at first while taking advice from people of how I can save money. I.e How operational & capital expenditure can relate to profit and income tax. Interesting about book keeper and accountant since it might be a book keeper that I would be after.

    5) I think the more clients I serve and the more busy I get will determine if I decide its worth taking out insurance. I think in the end I will do.
  10. Russell

    Russell Member

    Points already really addressed but heres my 2p worth

    1. If you're a sole trader I would just set up a business account in your own name
    2. Sole trader is not permanent but I've heard a few people still get some paperwork from the tax man after going back to full time employment
    3. I used Santander and the free banking if you have a min of £1000 going in, £5 a month if not. I think that's pretty reasonable and means you won't get charged for cashing cheques etc.
    4. You could prob set up a new basic current account or savings account without charge if your not sure how much you're going to use it, but these tend to have some restrictions on money in and out. Basically it's just advisable to keep your work and personal finances separate, just for ease of book keeping. When I first went freelance I used my personal account and it became a bit of a headache to sort what's what at tax year end.
    5. You don't have to have any insurances though some would advise Professional Indemnity Insurance Professional indemnity insurance quotes - indemnity cover
  11. richimgd

    richimgd Member

    1) Fair advice I think that is what I will do as its the most logical.
    2) I guess it seems like a fair risk to take, I think its quite unlikely that I will change my status back now come to think of it, I was just querying how much hassle it would be. Will just have to keep all my paperwork in order.
    3 / 4) Yep definitely wanting to get a business account for that reason. I have a meeting with my bank, Natwest on Thursday as I think they can offer me 2 years free business banking. I will just see if it sounds good and then go with them for the convenience.
    5) Cool I'll look into that.

    Cheers for the reply, always good to hear from people who already have the experience. :up:
  12. JeromeCollinge

    JeromeCollinge Junior Member

    I'm currently trying to get this self employed thing sorted to, I've heard from different people but the stories are all different. Some people say its easy and simple to do but other ways sound more complex and confusing but tomorrow I'll be phoning HMRC to speak to them about what to do and how to go about it.

Share This Page