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You started your business – so exciting – you’ve done the graft, the emotional roller coaster, the have-I-done-the-right-thing worries, the achievement of your first client and your second, third and tenth.
You’re more established now, you don’t feel quite a newbie any more.
You know what you’re doing and you know where you’re going. You’ve built a consistent income and you have money left over at the end of the month after essential bills.
You know now’s your time to take your business to the next level.
You started as a sole trader because the tax return was easy, or easier than a limited company, and you could do it yourself. If you’re honest, you don’t really understand limited companies and when you’ve asked questions or searched Google, you’ve left more confused than you started.
You need to ask yourself 4 questions so you know if you’re ready to take your business to the next level and if a company is right for you now.
Do your plans for business growth include bigger clients who will require you to be a company?
Corporates for example. Even something simple like diversifying into app building (for example) can mean needing to be a company as businesses like Apple won’t work with sole traders.
When you grow your business, sometimes the risk you take grows too, and only some of that can be covered by insurance.
Working with corporates, organisations or executives can be higher risk as there is less you personally control. You need to look at the risk and decide what’s appropriate.
When you have a mortgage and dependents, you have ‘more to lose’ than if you rent and it’s only you.
We don’t need any ‘you’ll lose your house if you’re a sole trader’ scaremongering but you do need to consider how comfortable you are with your clients, risk and your circumstances.
This is the last factor to consider in my opinion, not the first.
Although having a limited company can save you money on tax, tax laws can change which the Chancellor has done very recently.
You need to uplevel because it’s the right decision for you and the future of your business.
Taking time to explore whether a limited company is right for you is a great way of bedding down your strategic planning for how you’re going to take your business to the next level.
You’re even paid differently as a limited company, so you need to get sorted on your business and personal finances too.
It forces you to seriously think who your clients are going to be, how you’re going to expand, your financial responsibilities and goals and how your want the future of your business to look like in the next 5 years.
Whether you decide to stay with sole trader or incorporate, the next level is about what feels right for you, not what you ‘should’ do.
I know you can do it and it’s always such an exciting time growing your business. Take a moment to celebrate this step!
If you need support taking your business to the next level as a limited company, or want to explore what you need to do if you have a limited company and how you’re paid, get in touch or have a look at my Limited Company Day Retreat.
If you need easy to understand courses and guides with printable checklists and a sense of humour and mentions of cake, have a look in my shop.