The term solo entrepreneurship, sole trader or solo entrepreneur is often used to describe people in self-employment or just an entrepreneur.
The fact is that the term solo entrepreneur is currently popular as more people now go into self-employment and work for themselves. However, in practice and mindset, there is a big difference between a solo entrepreneur and an entrepreneur.
A solo entrepreneur is like a one-man business who owns and runs the business. He/she is the primary driving force behind the business and brings together all aspects of business activities.
Entrepreneurs have a vision for their company, and unlike solo entrepreneurs, they excel at networking and build their companies with a team of exciting and incredible individuals.
Protecting your assets as a solo entrepreneur
Sole traders are often described as the backbone of British business, with 45.7% of the 1.97 million corporate businesses in the UK employing just one person.
If you’ve established your own company, you may be keen to keep your business assets separate from your personal ones – such as your family home and savings. Here are our top tips for doing just that.
#1]]. Pick the right entity
Being listed as a sole proprietor comes with several benefits, particularly when it comes to the ease and costs of starting your business. However, it could open up your personal finances to scrutiny if the worst comes to the worst.
A sole trader could see his/her personal possessions come at risk if their business owes money. But there are ways to mitigate this. As the name suggests, establishing your business as a limited liability company means that not all of your possessions will be liable should your company owe debts.
#2]]. Stick to the rules
Make sure your business practices are up to the highest standards. Your personal assets could have to be sacrificed if you are found guilty of business fraud or other criminal activities. This could be used to pay off any debts or costs that court orders.
#3]]. Check the small print
At some point in your business’s lifetime, chances are that you will require external funding. This could be through a bank loan or an overdraft.
However, it’s important to pay close attention to anything you sign when applying for finance. You have to remember that banks often offer products that can be secured against your personal assets.
So, make sure you read everything – and then read it again! This is the best way to make sure that you’re not putting anything at risk that you don’t want to before signing on the dotted line.
#4]]. Get the right insurance
While we all have full faith in our business being a success, you have to plan for all eventualities. Make sure your insurance covers everything you need, whether you’re selling goods from your own home or you’ve established an office.
A failure to insure yourself, or taking out the wrong insurance, could see you dipping into your own pocket if things get broken or go wrong – and that is money that you won’t be getting back.
#5]]. Plan ahead
A sole trader that has a business with a proven record of successes can easily plan ahead. So, if your business has proved to be a success, then you’ll want to start looking ahead to the future.
If you’re planning to hand your business over to a family member, inheritance tax could be an issue. This means you will need to carefully navigate the inheritance tax.
Many companies are eligible for business relief from inheritance tax, either when you are still alive or as part of your will. Make sure that you examine all your options and take out professional advice when looking to protect your personal assets as a sole trader.
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