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April 2, 2024

Things You Need To Know If You Are Considering Becoming A Sole Trader

There are so many reasons why you might want to start your own business. You can decide your own hours, you answer only to yourself, and you can work whenever and wherever suits you. With the good must come the bad, though, and being a sole trader can be a daunting and occasionally terrifying experience. We’ve collected a few tips below to help you start your journey out of employment and into the uncharted waters of self-employment.

Keep a consistent work schedule

We know, we know – we just said you could work whenever and wherever you want, and that’s technically true. If you’re going to be self-employed, though, you need to set and keep to a strict schedule, because there will be times you don’t want to work, and where you would have had a manager standing over you constantly feeding you a workload before, now you’re a free agent. With that in mind, use a calendar app on your phone (or a physical diary if you’re old-school) to keep a schedule, and don’t allow yourself to deviate from it unless you absolutely need to. This way, you’ll keep your nose to the grindstone, and the sole trader lifestyle will be rewarding rather than sporadic.

Manage your finances

Many sole traders are blessed with consistent business, and that’s great. When your business is really raking it in, you’ll feel prosperous and happy because you’re succeeding. There will be down times, though, and they will vary in severity depending on the size and nature of your business. When that happens, you need to understand how to effectively manage your finances and budget for potential shortfalls. If you need an extra injection of cash, logbook loans are highly rated – a logbook loan will allow you to spend money on whatever you need, and the payment period is flexible and often negotiable, meaning you can pay back according to a timescale that suits you.

Don’t take on too much work 

When you first become a sole trader, you’ll probably be tempted to push yourself to the absolute limit in order to make as much money as possible and get yourself established quickly. This is a false economy; working too hard will only burn you out, and then you won’t be able to work when you really need to. You’ll need to make sure that you work to a consistent schedule, yes, but be sure you allow yourself breaks; unless you’re a machine (and we’re pretty sure you’re not), you need some “me time” to de-stress and recharge the batteries. You’ll work harder, faster and more efficiently with a nice break in between work periods.

Be responsible – know your legal position

Being a sole trader comes with a whole host of legal responsibilities and obligations which are handled by an HR department if you’re an employee. If you’re self-employed, though, you are your own HR department; you’ll need to handle everything to do with self-assessment tax returns, VAT and other financial and legal considerations. Don’t be afraid to seek the advice of a trained professional when it comes to things like this, because nobody is expecting you to know everything you need to right away. This kind of thing can really come back to haunt you if you don’t address it early, so make sure it’s on your agenda when you strike out on your own.

Chase unpaid invoices – don’t be afraid of confrontation

The allure of a regular paycheck is one of the biggest things that tempts people into employment; not needing to worry about when or where your next paycheck is coming from means you’ll never need to chase anyone up about it. When you’re a sole trader, though, that’s exactly what you’ll need to do. Create invoices for each and every job you take on, and make sure that they’re accurate, because although most of your clients will likely be on the level, there will be the occasional time when you’ll need to have airtight proof of work undertaken. Don’t be afraid to chase clients, too, because you don’t want to get a reputation for being too “chill” when it comes to being paid.

We hope these tips help you on your way to becoming a sole trader. It’s a daunting experience at first, but it can be one of the most rewarding and satisfying ways to work, if you’re willing to put the time and effort in to make it so.

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