Are you looking to set up a business as sole trader? Do you want your journey as sole trader to start on the right foot? Then, read on! This blog will help you prepare for your solo trader journey and increase your chances to succeed in your new career.
Consider the Pros & Cons
Like everything else in life you should first look at the pros and con of working solely before you decide on the way you want it to go. The pros and disadvantages of working as sole trader will help you reap the benefits of your business and reduce the risk.
You have the following main advantages when you work as a sole trader
- It is possible to use your own business name without having it registered with the Australian Securities and Investments Commission
- It’s simple to setup and operate
- You retain full control of your business assets as well as the decisions related to them
- Your personal tax filenum (TFN) is required to lodge sole trading tax returns.
- There is no need to pay for payroll tax, worker’s compensation or superannuation if you don’t work for your own business.
- You can easily transition from this business structure if it is not too complicated if the goal is to grow your business.
However, these are the main downsides to being a sole entrepreneur:
- Being personally liable means that your personal assets and all your personal assets could be at risk in the unfortunate event of a business failure
- This leaves little time for tax planning. All income earned through a sole trading business is subject to tax.
Take Care of Your Trade Marking and Business Name
Although your name can be used to avoid having to register a business, sometimes it’s better to use a different business name. To apply for business names, you will need to obtain an Australian Business Number.
It is also important that you trade mark your business name, and any other names used for your business in order to protect it against misuse by others. To make sure you are taking the correct steps to trademark your business name as well as other intellectual property, a attorney is available to assist you.
Purchase Insurance
You, as sole trader will be responsible and liable for all your business’ liabilities. This puts your personal and business assets at risk. Insurance is essential for both your personal assets and those of your company (e.g., business equipment). For your safety, you can insure work-related property.
These steps will help you prepare for the challenging, yet rewarding journey of being a sole trader.
