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Sole Traders and Insolvency
For many, the prospect of being one’s own boss, of retaining more from the proceeds of one’s own work and not simply toiling hard just to make someone else rich is an attractive prospect.
The simplest way to work for yourself is to become what’s known as a ‘sole trader’. Sole traders must still contribute to the public purse by paying taxes on their profits but the rules are simpler than they are for limited companies and for many this is a relatively uncomplicated way to earn a living.
Unfortunately, however, as with all businesses, there are risks as well as rewards. The primary risk for a sole trader is that the trader as an individual is legally indistinguishable from the trader’s business. Joe Bloggs trading as JB Plumbing are, for all intents and purposes, one and the same.
If JB Plumbing ends up in debt (perhaps sued for a burst water pipe), Joe Bloggs will be pursued for that debt.
When it goes wrong
If a sole trader finds either himself, or his business, in more debt than either can handle, then both are at risk. It’s this prospect that can often be a factor in making a bad situation worse, as sole traders are often aware of this and as such are reluctant to seek help in the hope that things will get better on their own. This is almost always a forlorn hope. As with most forms of debt and insolvency, the sooner help is sought, the easier the process will be and the better the outcome.
With sole trader insolvency being more or less the same as personal insolvency, similar principles can often be followed. If the business is sound and capable of turning a profit, then this presents additional options and more solutions may be possible.
The first stage is to get in touch with us for a free consultation so that we can assess your situation and offer advice on the best solution.
Once you have a plan in place, a solution to work towards and the immediate pressure of impending debt removed, you’ll be able to concentrate on what you do best and trade your own way out from underneath your financial burden.