Dan Bermingham-Shaw shares his key tips for starting your career as a solopreneur.
Solopreneurs or sole traders work hard to see their ideas get off the ground from concept to fruition, and all at their own personal liability.
Solopreneurs are looking to create a profitable business they can sustain, and many work in and live off of themselves without the urge to grow an ‘empire’ or sell on in the future. It really is their own model to shape and shift as they choose.
This career choice is ever on the increase too. Many independent work reports show a huge 82% of solo workers feel happier and more fulfilled working alone than previously as an employee, and annual growth is up 3.6% for sole traders.
The solopreneur path could well be the one for you. Freelance writers, graphic designers and accountants are just a few solo ventures that can be classed as solopreneur options, but there are some key steps and factors you’ll need to take on before you start your business.
Key steps for solopreneurs – what you need to know:
What it means to be a sole trader
A sole trader runs their own business as an individual and is self-employed. This means you keep all of your business’s profits after you pay tax on them. However, sole traders are personally responsible for any losses the business makes – meaning you have unlimited liability for your business.
How to set up as a sole trader
You’ll need to register as self-employed with HMRC, letting them know you’ll pay your tax through Self Assessment, which is filed every year. Simple criteria also need to be met before you can register, including proving self-employed earnings of over £1,000 in a 12 month period.
1. Naming your business
A super easy one for solopreneurs as you can trade under your own name or choose a business name with no need to register it. You’ll need to follow a few rules set out by the government, such as not choosing anything that may cause offence or already be trademarked, but otherwise, you can get creative.
2. Managing your accounts💰
A sole trader is one of the simplest businesses entities making accounting pretty straightforward. You just deduct tax, National Insurance and expenses, and whatever’s leftover is yours. However, it’s a good idea to talk to an accountant before you set up as they will offer you advice on any grey areas when starting out. They can also support you with registering to be self-employed and filing tax returns with HMRC, as well as offering advice as you build your business.
3. Open a separate bank account
Open a bank account just for your business income. Even though it doesn’t have to be a business account and it can be in your name, you should keep your business income separate to your personal accounts.
4. Get paid on time with pro invoicing tools
As a one-person business, your time actually is your money, so investing in accounting software that will create, send and chase your invoices for you is a smart move from day one.
5. Choose your workspace
Where you work could be as easy as setting up a home office, renting a hot desk space or finding a private premise. It all depends on your allocated budget, immediate needs, and the best environment to nurture your craft.
Start with a list of must-haves, including any specialist equipment for example, then drill down to the details of what you’ll truly need, and create the space.
6. Set a start date📅
Maybe the most exciting day of your venture – the first as a solopreneur!
You’ll know when the timing is right; it’s a line between being overly cautious and throwing caution to the wind. Sometimes, in business either approach can be positive, but take a look at your individual deciding factors, and go ahead and name that day. It will give you an end goal and a timeline to get there. If you’re thinking of starting your new venture, find out your personalised business ‘readiness rating’ along with resources, advice and inspiration with Sage’s new quiz here
*We strive to do our best when supporting small business and their growth. Our business databases can give you information and data that can help you with advertising, market research, company information, and industry factsheets. If you have already taken the plunge, we would love for you to join us at a seminar, our workshops cover digital marketing, business model canvas and planning, demystifying taxes and intellectual property to name a few. Visit our events page or website for more information.