7 Benefits of Being a Sole Trader: A Guide for Export Managers
Are you thinking of starting your own export business? Do you want to have more control over your work and income? If so, you might want to consider becoming a sole trader.
A sole trader is a type of business structure where you are the only owner and operator of your business. You are responsible for all aspects of your business, from managing your finances to dealing with customers and suppliers. You also get to keep all the profits after paying taxes.
Being a sole trader has many advantages, especially if you are in the export industry. In this article, we will explain what a sole trader means and how it can benefit you as an export manager. We will also give you some tips on how to set up and run your sole trader business successfully.
What is a Sole Trader?
A sole trader is a simple and flexible way of running a business. It is also known as a sole proprietorship or self-employed. As a sole trader, you are not a separate legal entity from your business. This means that you and your business are one and the same.
As a sole trader, you have full control over your business decisions and operations. You can choose how to run your business, what to sell, who to work with, and how to market your products or services. You can also change or adapt your business model as you see fit.
However, being a sole trader also means that you have unlimited liability for your business debts and obligations. This means that if your business fails or gets sued, you could lose your personal assets, such as your home or car. You also have to pay income tax on your business profits and comply with various legal and regulatory requirements.
How to Become a Sole Trader?
Becoming a sole trader is relatively easy and inexpensive compared to other types of business structures. You don’t need to register your business name or file any documents with the government. However, you still need to follow some steps to start and run your sole trader business legally and efficiently.
Here are some of the things you need to do as a sole trader:
- Choose a suitable name for your business. You can use your own name or a trade name, as long as it is not misleading or offensive. You also need to check that the name is not already taken by another business or trademarked by someone else.
- Register for an Australian Business Number (ABN). An ABN is a unique 11-digit number that identifies your business to the government and other parties. You need an ABN to lodge tax returns, claim tax credits, register for goods and services tax (GST), and invoice customers.
- Register for GST if your annual turnover is more than $75,000. GST is a 10% tax that applies to most goods and services sold in Australia. You need to register for GST if you expect your turnover to exceed the threshold in any 12-month period. You also need to charge GST on your sales and pay it to the Australian Taxation Office (ATO) quarterly or monthly.
- Open a separate bank account for your business. This will help you keep track of your income and expenses and avoid mixing them with your personal finances. It will also make it easier for you to prepare your tax returns and financial statements.
- Keep accurate and complete records of your business transactions. You need to keep receipts, invoices, bank statements, contracts, and other documents that show your income and expenses for at least five years. These records will help you calculate your tax obligations, monitor your cash flow, and measure your business performance.
- Obtain any licenses, permits, or registrations that are required for your export activities. Depending on what you are exporting and where you are exporting to, you may need to comply with various rules and regulations regarding customs, quarantine, safety, quality, labelling, packaging, etc. You may also need to join industry associations or networks that can provide you with support and guidance.
Benefits of Being a Sole Trader as an Export Manager
Being a sole trader can offer you many benefits as an export manager. Here are some of the main ones:
- You have more freedom and flexibility in running your business. You can choose when, where, and how to work, without having to answer to anyone else. You can also adjust your business strategy according to market changes and customer needs.
- You have more opportunities to grow and diversify your business. You can explore new markets, products, or services without having to consult with partners or shareholders. You can also take advantage of government grants, incentives, or programs that are available for small businesses and exporters.
- You have more potential to earn higher profits. As a sole trader, you get to keep all the profits after paying taxes. You don’t have to share them with anyone else or reinvest them in the business if you don’t want to. You can also set your own prices and margins, depending on your costs and competition.
- You have more personal satisfaction and fulfilment. Being a sole trader can give you a sense of achievement and pride in your work. You can also pursue your passion and interests, express your creativity, and make a positive impact on your customers and community.
Tips for Running a Successful Sole Trader Business as an Export Manager
Running a sole trader business as an export manager can be challenging and rewarding. To succeed, you need to have a clear vision, a solid plan, and a strong work ethic. You also need to be aware of the risks and responsibilities involved and take steps to mitigate them.
Here are some tips to help you run your sole trader business as an export manager effectively and efficiently:
Do your market research.
Before you start exporting, you need to understand your target market, customers, competitors, and industry trends. You need to identify the demand, opportunities, challenges, and risks for your products or services. You also need to find out the best ways to reach, communicate with, and satisfy your customers.
Develop a business plan.
A business plan is a document that outlines your business goals, strategies, actions, and resources. It helps you clarify your vision, set realistic objectives, allocate your budget, and measure your progress. It also helps you attract potential investors, partners, or suppliers.
Manage your cash flow.
Cash flow is the amount of money that flows in and out of your business. It is essential for your business survival and growth. You need to monitor your cash flow regularly and ensure that you have enough money to cover your expenses and debts. You also need to plan ahead for any fluctuations in income or costs due to seasonal or unexpected factors.
Protect your assets and liabilities.
As a sole trader, you are personally liable for any debts or damages that your business incurs. This means that you could lose your personal assets if something goes wrong with your business. To protect yourself, you should consider taking out insurance policies that cover your business activities, such as public liability, professional indemnity, product liability, etc. You should also consider forming a trust or a company that can limit your liability in certain situations.
Seek professional advice.
Running a sole trader business as an export manager can be complex and demanding. You may not have all the skills or knowledge that you need to handle every aspect of your business. Therefore, you should seek professional advice from experts who can help you with legal, financial, tax, accounting, marketing, or other issues that may arise.
What is a sole trader and why is it popular?
A sole trader is a person who owns and runs their own business without any partners or shareholders. They are the simplest and most common form of business structure, especially for small businesses and self-employed individuals. According to the UK government, there were 3.5 million sole traders in the UK in 2022, accounting for 59% of all businesses .
Some of the advantages of being a sole trader are:
- You have full control over your business decisions and operations
- You can keep all the profits after paying tax
- You have less paperwork and regulatory requirements than other business structures
- You can choose your own business name and logo, as long as they are not offensive or misleading
- You can benefit from a pass-through tax advantage and a 20% tax deduction in some cases
How is the global demand for sole traders changing?
The global demand for sole traders depends on various factors, such as the economic conditions, the market opportunities, the consumer preferences, and the technological innovations. Some of the trends that may affect the demand for sole traders are:
- The rise of e-commerce and online platforms that enable sole traders to reach more customers and sell their products or services across borders
- The increase in remote work and freelancing that allow sole traders to work from anywhere and offer flexible and customized solutions to clients
- The growth of social media and digital marketing that help sole traders to promote their brand and attract more followers and leads
- The emergence of new niches and sectors that create new opportunities for sole traders to offer specialized and innovative products or services
However, there are also some challenges and risks that sole traders may face, such as:
- The lack of legal protection and limited liability that expose sole traders to personal responsibility for any debts or losses of their business
- The difficulty in accessing finance and funding that may limit the growth and expansion of their business
- The high competition and low barriers to entry that may reduce the profitability and sustainability of their business
- The uncertainty and volatility of the market conditions that may affect the demand and income of their business
Therefore, the global demand for sole traders may vary depending on the industry, location, and skills of each individual. Sole traders need to be adaptable, resilient, and creative to succeed in a changing world.
References:
https://www.ssm.com.my/sites/default/files/guidelines/OWNER%20RESPONSIBILITY_new.pdf
http://gst.customs.gov.my/en/SiteAssets/doc/Registering%20for%20GST%20Amend%201.pdf
https://www.gov.uk/set-up-sole-trader
https://www.investopedia.com/terms/s/soleproprietorship.asp
https://www.business.gov.au/Planning/Business-structures-and-types/Business-structures/Sole-trader
https://www.export.org.au/global-trade-updates/sole-traders-and-exporting
https://www.business.vic.gov.au/starting-a-business/choose-a-business-structure/sole-trader
https://www.smallbusiness.wa.gov.au/business-advice/business-structure/sole-trader
