What is a sole trader?

Library of Congress 1911

There’s a discussion going on over at LinkedIn about what it is that makes people go freelance.  Reading the comments started me thinking about a more fundamental question.  Not “what’s so attractive about freelancing?”, but “what is a freelancer?” – or given the title of my blog, “what is  a sole trader?” And do they count as businesses?

 When is a business not a business?

This is not such a dumb question as it seems.  The most common search terms that land people at my blog are about sole trading – from the slightly baffling “Is Rupert Murdoch a sole trader?”, to the more general “What is a sole trader?”

The dictionary definition is helpful, but being a sole trader is a slippery thing to pin down. (By the way, I should say that I’m using the terms freelance and sole trader interchangeably to mean one person working for him or herself.  They aren’t necessarily the same thing.  And to be strictly accurate, I’m not a sole trader myself: I’m a Limited Company.  I just didn’t think Limited Company PR was a good title for a blog.  There’s some advice on the differences between sole trading and limited companies here)

Anyway, whatever you call me, I  am a business.  I’m registered at Companies House and with the VAT office.  I have an accountant to help me sort out my corporate tax.  My heart swells with pride when we entrepreneurs are hailed as the saviours of the British economy.  But I’m also not a business as its commonly understood: I don’t have premises (I work from clients’ offices or at home) I don’t have staff, I don’t sell a product other than the ideas I generate, so I don’t have production line, warehousing or distribution problems to solve; I don’t need much equipment (printer, laptop, phone, kettle).  I work with lots of small businesses who face all these issues, so I understand the problems.  I just know that I don’t share them.  And neither, I’d guess do many of the 3.6million other companies without staff – rather insultingly classed as “zero businesses” – which are estimated to be in operation at the moment.

Advice for Sole Traders

This seems like a small point, except when it comes to looking for ideas for developing my business.  Small business advice services are geared up to help the businesses with the staff and premises to worry about.  There isn’t much for me on the recently launched (and already much derided) StartupBritain though as my needs are pretty simple  I can work out most things for myself.   But, just in case Rupert Murdoch’s reading and is thinking of branching out as a sole trader, here’s some online advice (though I’m not a tax, insurance or legal expert, so I’d seriously advise him to check with a professional)


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