We, like many others, have both been self employed for a very long time.
We each operate as sole traders and submit our personal tax filings on an annual and timely basis because we recognise "The Relationship between Legal Compliance & Stressbusting™".
Our moderate level of business activities are fully insured, but that does not remove the risk that, should something go wrong, we could be held personally liable for the obligations and liabilities of our ‘businesses’.
And the risks of ending up in Court are laid out in our previous post entitled "The Dangers of Litigation to Stressbusting™".
One way to remove this risk might be for us to “incorporate” (effectively convert) each of our sole trader businesses into a corporation or company structure and become directors and shareholders of that incorporated entity.
This would, in theory, provide us with the benefit of “limited liability”, meaning we would and could not be held liable for the debts of the corporation or company other than in restricted circumstances, namely if we provided personal guarantees for the debts of the corporation or company, or there was any fraud or misconduct on our part.
It might also entitle us to more favourable tax treatment, better access to funding to build our businesses, a higher brand awareness and improve our chances of being able to sell our businesses in due course.
The flipside of these major benefits (which ought not to be dismissed out of hand), however, is the financial cost of both initial incorporation and the onward higher level of regulatory and filing responsibilities that apply to directors of a corporation or company than to sole traders.
That said, there are excellent companies out there who offer virtual services to both sole traders and corporations, such as a registered office address, post handling/forwarding services, dedicated phone lines and basic secretarial services, in return for a reasonable monthly fee.
Deployment of such support services can assist greatly in creating a healthy division between work and home life, the importance of which is explored in our post entitled "Leave Your "Work Head" at Work to Stressbust™ at Home".
On balance, we have elected to remain fully insured sole traders administering our own businesses from home, at least for now, but to keep the matter under review if and when our respective businesses grow and e.g. there is a desire or opportunity to take on larger customer accounts who often require an incorporated vehicle as a condition to contracting.
This conclusion was arrived at in full acknowledgement of the risks applying our "5 Key Steps to Stressbusting™ Decision Making", and placing key emphasis on our current desire for simplicity and autonomy. See also our post entitled "Break Time Quickie - Act on your Priorities" for further insights in this regard.
We are not alone in facing the above perpetual ‘chicken and egg’ quandary.
And these are important decisions for every sole trader that should not be taken lightly and should only be taken on a case by case basis under specialist advice of lawyers or accountants in the event of uncertainty or doubt.
For further information in this regard, please consult our Legal Notices page.
We hope you find the above general thoughts and our own experiences useful.
LOL,MikeyM™&LouLoU™ 😊😘💛💚💙 xxxx