‘Admin’ is often the painful entry at the top of every businesses “to-do list” but includes a number of different financial and legal responsibilities and is an absolute necessity nonetheless. In this month’s edition of ACCELERATE we’ll outline the correct way to pay your dues and stay above board.
Most tradespeople are sole traders, which is the simplest form a business can take in respect of company regulation. First of all, you have to tell HMRC and register as self-employed which leads to you receiving a yearly tax self-assessment where you declare your businesses’ revenues and expenses.
It’s important to remember that being a sole trader means sole responsibility, so every debt is your own responsibility to pay off. It’s also worth mentioning that you need to be using the correct insurances such as public liability so you’re able to work in home and business spaces.
Furthermore, you can register for VAT for your sole trader business but you must remember that, in the eyes of the law you have unlimited liability for anything should it go wrong. Also, just because you face a simpler tax structure than more formal businesses, this doesn’t mean it’s less tax. Unfortunately, in the case of taxes, personal and business finances can get mixed up so it’s recommended to set up a separate business bank account.
Limited companies are independent legal entities and this means that the liability is limited and your personal assets aren’t at risk in the event of financial troubles. Non-VAT registered companies have to pay corporation tax but once you are registered under Companies House (for an admin fee of £15) you get things like copyright protection. You also have to file your annual accounts at Companies House (see below) which might be something you want to get an accountancy firm to help you with. There are lots of great online businesses around who are set up to help smaller traders.
The financial information of your limited company is public information - unlike a sole trader - so your business financial details are available on the internet via Companies House.
Running a business that interacts with the public has legal responsibilities, but it’s worth noting the responsibilities also extend to the owners’ duty of care to their staff. The law is ever-changing and hard to explain thoroughly, but the current list of areas to be understood are: GDPR, Pensions, Pay, Harassment, Contracts, Equal Opportunities and Health and Safety as it pertains to your trades business.
Health and safety
Clearly, Health and Safety is one of the most relevant, and important areas of law for trades people. According to research, 41% of tradespeople don’t use health and safety equipment and a third admitted they weren’t insured.
The Health and Safety in Work Act 1974 absolutely obligates you to take the necessary precautions. This starts at the ground level with appropriate footwear, hard hat or goggles and it also means in relation to proper risk assessments being done of a new site or proper training given to all staff. Without these simple steps you are potentially liable to compensate for any mishaps that occur in your working environment.
For more information and detail on playing by the book legally, please seek the advice of the experts available in the homeservefoundation.com.