It is a common perception that sole traders may struggle more with the organisation of their business. As you have to manage all finances and business processes, this can become very time-consuming. But do sole traders really struggle more with finances?
Coleman & Co can support all businesses throughout Lisburn whether you are sole traders or limited companies. We always have advice and a range of accounting services available.
Sole Trader Advantage
Despite how difficult it can be to maintain all business finances, there are many advantages for sole traders. Running your business allows you to maintain full control as long as it is run correctly. This means there is no interference from others and that all decision making comes down to you. your business only makes choices you are happy with.
You can also choose to make your business more personal and unique. As long as your business is run correctly, there should be little worries over your financial performance. You should know all your transactions inside out, preventing cash flow from becoming an issue.
A big problem for sole traders can be making payments on time. When you are dealing with all the finances within your business, it can be easy to simply forget about certain payments that haven’t been planned for.
Whether this is large or small payments, it is important you stay on top of all transactions. You should particularly pay attention to HMRC payments, ensuring you are always prepared for this. If payments need to go out for loans, monthly payments or to suppliers, this must always be planned to ensure payments are never missed.
Failure to make payments to the HMRC on time could even lead to fines and penalties. This should always be a priority for all sole traders.
Reducing Time Consumption
No one can create time out of thin air and no matter how hard you work, this is always something you will run out of. Sole traders must plan effectively and allocate times throughout the month to manage their finances. This is not something you should do simply when you have free time.
By allocating a specific time slot to manage your finances, you can reduce the time spent on finances. This will also give you more time to manage other processes within the business, for the best chance of running a successful company.
Destined To Fail?
Whilst 9 out of 10 businesses survive their first year of trading, 4 in 10 businesses die within 5 years. It is a big task to keep your business afloat and if this is your first time managing a business, it can become very difficult.
Sole traders benefit from the fact you may not have many staff to pay in your earlier years. However, you must plan for growth to ensure your assets and cash will not run out and that the business can grow at a steady rate, rather than failing within 5 years. Sole traders are certainly not destined to fail and can often perform better than bigger businesses. However, it is important to have a financial plan to keep cash flow positive, whilst ensuring you spend enough time managing finances.
If you are a sole trader and require advice from our team, do not hesitate to contact Coleman & Co. We can provide our services throughout Lisburn, ensuring your accounts and finances and recorded and managed correctly. Call us for more information on 028 9266 3599 or fill in our contact form to make an enquiry.