Sole Traders
Advice for Sole Traders
It has never been easy to be a sole trader: long working hours and not normally well paid. The rewards are often gauged by the opportunity to work for and be answerable to no other but oneself. You can’t be sacked!
From a business point of view, sole traders and the self employed are in a vulnerable position with regard to their creditors. Not being a limited company exposes them to debts that have unlimited liabilities. Personal assets are at risk when things go wrong.
The recent dramatic downturn in the building and construction industry has seen many builders and allied trades lose valuable contracts. Banks are reluctant to expose themselves to further lending risks. Overdrafts are being called in. Years spent building up a reputation is also at risk.
When income is reduced borrowings can’t be serviced and debts mount up. With no obvious answer in sight, you start to lose confidence and face the very real possibility that your future is in doubt. Self employed people rely on the advice of professionals; solicitors for legal guidance, accountants for tax obligations and preparing annual accounts.
How can a Sole Trader trade through the problem?
It is true that liabilities are unlimited and personal assets are set against them. However, The 1986 Insolvency Act recognises that a sole trader is seen as an individual in his or her own right and can therefore take advantage of the new legislation changes made possible by the 2002 Enterprise Act introduced on 1st April 2004.
An Individual Voluntary Arrangement is a very viable proposition for both the creditor and debtor. The object is to reach a solution that benefits both parties by continuing to trade through the problem. Once an agreement has been reached and confirmed at a creditors meeting, the county court chosen for the application endorse the agreement to ensure security for all. This process is dealt with by one of our professional insolvency practitioners.
The arrangement is an ideal opportunity for the trader to be given the time to turn things around. Personal assets are invariably rescued. Qualifying conditions have to be met and in the main are straightforward. Naturally, individual circumstances are different and the outcome of the options available have to be considered by the sole trader involved. The main thing when experiencing a difficult financial period is not to panic.
By engaging a professional insolvency consultant you will have guidance and experience available to you at a cost much less than a solicitor or a debt management company. Don’t forget this is new and mysterious to you but we do it for a living and know what the law allows you to do.
Click to contact Simon Ashby at Inspired Performance or call 01590 675191
IN SUMMARY:
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The Book Of Survival:
“To live through an impossible situation, you don’t need the reflexes of a Grand prix driver, the muscles of Hercules or the mind of Einstein. You simply need to know what to do!”
Anthony Greenbank
USEFUL LINKS & Numbers
www.insolvency.gov.uk
www.r3.org.uk
www.crisissurvivor.co.uk
Inspired Performance: 01590 675191