Setting up as a sole trader is a relatively simple and there's no reason to waste money on expensive legal advice.
Whilst it may be comforting to go and sit in those ever so present leather chairs, and speak to a chap in a sharp suit about setting up your new venture, the costs of this are unnecessary and disproportionate, not only this but when that invoice lands on your doorstep the costs may adversely affect your cash flow.
Tax is the key…
You will need to inform HMRC that you are now self-employed and setting up your own business. This is vital so that you may be set up with your own unique tax number and ID. You will also have to complete the self-assessment tax return and consider VAT. All the relevant information for this is at your fingertips, by simply using the HMRC website search engine. If numbers aren’t your thing it may be worth getting an accountant to assist with your tax once your enterprise is up and running.
Remember to keep hold of all receipts and make detailed records. You don’t want to be caught out by the ever present VAT Man knocking on your door.
Once you have your tax sorted, the next stop is www.gov.uk. Here you will find more information about running a business from a sole trader to a limited company or LLP. The Government website covers everything from tax and VAT to registration and naming your business.
Once you have reviewed the HMRC and Gov UK sites if you are still unsure about the perks and risks of being a sole trader, the Citizen’s Advice Bureau will offer free and informative legal advice. The CAB provides the option not only to use the internet but also to speak to a member of their team in the numerous offices across the country.
Have you thought about speaking with your Local Chamber of Commerce?
There is also always your local Chamber of Commerce. Here you will not only be able to get start up advice, but you will be able to speak to other business owners about their experiences and attend seminars which will give you a chance to learn about new law which may affect you and ask questions without a costly legal bill at the end.You can find your local Chamber of Commerce here.
Finally, some key legislation
On a final note, there is some key legislation to be aware of a sole trader and these can be located at http://www.legislation.gov.uk. These are as follows,
- Trade Description Act 1972: make sure your descriptions of products or work isn’t misleading, this act makes it a criminal offence.
- Sale of Goods Act 1979: make sure you carry out work to a satisfactory standard, meet any promises you made and makes sure your products are as described.
- Sale of Goods and Services Act 1982: has the same requirements as the Sale of Goods act but also demands that your services are satisfactory, preformed with reasonable care skill and cost.
- Data Protection Act 1984: requires that any personal data you hold on an individual are to be registered, this is information such as name, address or date of birth. Registration forms can be found at the post office.
- Consumer Protection Act 1987: makes you liable if you supply a faulty product which causes damage or injury unless you can show you held no knowledge of dangers at time of supply. This Act can also provide you with protection, it is key to not only provide an estimate and a written quote only when you have properly assessed the costs of the work.