How I started up as a sole trader

Man plastering a wall

Andy Oakley of Bristol-based AO Pro Finish Plastering explains how he started up as a sole trader

“I started out as a sole trader under the name AO Pro Finish Plastering in 2006. I’d already been to college to do an NVQ level three apprenticeship and then I worked for a firm for two years. Because the work was subcontracted, I was already registered with HM Revenue & Customs [HMRC] as self-employed before striking out on my own.

“When I initially phoned HMRC to register as self-employed, I was asked to give my name, address, date of birth, nature of my work, start date and National Insurance number. Afterwards I went to the local tax office to give them proof of my identity. It’s dead easy to start up as a sole trader, plus, you can start work straight away – unless you need to apply for a licence.

Setting up a business

“Rather than setting up a limited company, I became a sole trader because it’s easier, cheaper and there’s less admin to do, plus, my personal financial liability is limited, so I don’t need the protection being a limited company grants. Maybe in the future, if the business grows considerably, I might change to a limited company.

“Even as a sole trader, I can still take on staff. I don’t employ anyone at the moment, so I just have to make sure I earn enough to pay my wages and tax. Sometimes I ask other self-employed tradesmen to help out, if a job is too big for me.

“I had some inheritance money, so I used that for initial advertising and to buy insurance, a van and some tools. I had to get public liability insurance, but I also took out accident insurance, which covers me if I have to take time off if I have a serious injury. Obviously, I had to insure my van, too.

A sole trader’s responsibilities

“As a sole trader, you’re personally responsible for debts if your business goes under. I try to keep a constant stream of work coming in and I put money aside as back-up in case the work dries up.

“I keep records of jobs I’ve worked on and how much I’ve been paid, which is vital when it’s time to work out how much tax I must pay. I write all that down as I go along, as well as retaining sales receipts as proof of all purchases the business makes.

“I pay an accountant to fill in my self-assessment form. I don’t have the time or knowledge to fill it in myself. I’d rather pay him to do it, while I concentrate on what I’m good at – plastering.

Using adverts and online marketing

“I advertised in directories such as the Yellow Pages and Thomson. You pay a fee for the year and they sort out the ad for you. The biggest mistake I made was spending too much on a big advert in the Yellow Pages. Having smaller adverts in more directories and sending out leaflets locally would have been more effective.

“Most of my business comes from word-of-mouth. I started out doing jobs for friends of the family, they then recommended me to people they knew and the work has just grown from there. I haven’t done any online marketing yet, but I would like to create a website in the future so that people can see photographs of the jobs I’ve done.”

Andy’s three key lessons

  • Consider all relevant options when deciding which form of business to set up
  • If your personal financial liability is small, becoming a sole trader is easier and cheaper than setting up a limited company
  • Put money away as you go along, then you won’t have to panic when you get your tax bill

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