Why Sole Traders can learn from Hells AngelsPosted Wednesday, June 19, 2019
Many people venturing out into the world of self-employment often default to being a sole trader as it’s perceived to be less hassle and the simplest way to get started.
Hunter S Thompson was a renowned journalist who on one occasion Joined Hells Angels so he could spend a year riding with them in order to write a first-hand account of the lives and experiences of its members. The phrase ‘Anything worth doing, is worth doing well’ is attributed to Thompson.
There’s not a better phrase I can think of when deciding on what advice to give someone entering the world of Professional Contracting.
Whether that be in IT, Pharma, Life Science, Engineering, Business Consultancy, Finance, or any other skill-set…if you’re going to do it, do it right and make sure you get set up in a limited company.
Pitfalls of being a Sole Trader
- Limited Liability is something that a sole-trader doesn’t have. A Limited Company will give you limited liability ensuring you are protecting you and your family against any potential claims in the future, spurious or otherwise.
- As a sole trader you pay income tax (up to 52%) on all your profits – even if you’re going to be using those profits to invest back into your business at a future date (e.g. purchasing a vehicle). In a company, you only pay income tax on the salary you pay yourself. Any balance of profits can be retained in the company at corporate tax rates which are substantially less than personal tax rates.
- As a sole trader your pension contributions are restricted to a certain percentage of income based on your age. Through a company executive pension these restrictions can be avoided.
- As a sole trader you can’t get the business to pay for an electric vehicle – you can only claim the business element of the expenses.
Company set-up is hassle free
Setting up a company is simple and it’s free if you come to Contracting PLUS – we do all the work for you and then we’ll manage all the month to month expenses, payroll and administration for an affordable (and tax deductible) monthly fee. This includes company insurances at no additional cost.
Already have a company?
No problem. We can still help. Use our cloud accounts package so you don’t need to pay for your own. We’ll add you to our insurance policy saving you a few hundred every year and we’ll give you discounted healthcare, fuel cards and lots more. We’ll set you up with your free Financial Review with our in-house pension and protection advisors. Your Dedicated Accountant will be your single point of contact for all your accounts and tax queries
As a sole trader it’s more difficult to sell your business in the future. Clear lines of distinction between business and personal make all transactions cleaner.
Companies also allow more flexibility and options for effective tax planning. Remember, it’s not always how much you earn that matters, its how much you keep.
Contracting PLUS provide Company Set Up and all administration and accounts for Professional Contractors and business consultants. They also provide Umbrella Companies (which will have you set up and ready to invoice as a self-employed company director in just a couple of hours).
To get set up or if you’d like more information and an estimate of your take-home pay contact Jennifer Doyle on 1800 54 54 22