Sole Proprietorship

Whether your business is within a service industry like accounting, gardening or construction or as a skilled tradesman like an electrician, plumber or mechanic, you will have costs that need to be paid and accounted for. These costs may include transportation, if youre work involves an element of travel, or a property rent, if you are working from an office or goods yard. More often than not, these costs will be incurred monthly.

Accounting

Even as a sole trader you will need assistance from other professionals in order to function. Unless you are an accountant, you will need one to help your business grow. Keeping your personal accounts and your business accounts separate is the first way of establishing where the company's money comes from and goes to, but that doesn't tell the whole story. A qualified accountant will be able to show the owner where money could be saved.

Tax

Having the services of an accountant is particularly important when tax is considered. An accountant's tax saving strategies could save the business money. Using an accountant also saves you time that can be invested in growing the business by taking on more work.

Bills

Everyone has bills to pay and it's the same for a small business. Whether the bills are for the cost of energy like electricity, or loans against machinery or vehicles, their costs have to be taken against any revenue to establish the profit. Some costs are fixed and are easy to calculate. These costs include any loans or rent agreements in place. Other costs, like the cost of materials and utility bill charges, vary from month to month.

Most utility companies allow for monthly direct debits that create a fixed cost for a set period of time. If you choose to do this you should make sure that the amount you pay covers more than the estimated monthly usage, as it's always better to overestimate the cost. The same goes for any cost that is not fixed.

Final Word

Sole traders don't need to take a wage, as they are entitled to all of the companys profits. Understanding the company's costs and managing them well ultimately leads to greater profits for the owner. Before a business is started, traders should make a list of the associated costs and make sure that the estimated revenue will exceed the costs by enough to provide a living.