Financial Advantages of Becoming the Owner of a Small Business

Aug 29

Financial Advantages of Becoming the Owner of a Small Business

A small business is generally defined as one that employs up to 49 people, though the majority of such businesses in the UK are much smaller. In fact many operate as sole traders and do not have any employees. The Department of Business, Innovation and Skills estimated that, at the beginning of 2012, there were 4.8 million businesses in the country, with 99 per cent of them being classified as small.

Owning a small business

There are several routes into becoming a small business owner; starting one from scratch, inheriting a family business or buying one already in existence. However it is done, owners need to accept that there will be lots of hard, but ultimately satisfying work to be done.

Start-up

Perhaps the most exciting, but also the most nerve-wracking part of the entire process, is actually starting up a business. This may be as a result of an individual having a brilliant idea and believing there is a market for it, or an employee of a company who has had enough of working for someone else and wants to strike out on his or her own.

Inheriting

Family firms are a well-established part of the UK’s small business economy. It is usual for a family business, whether large or small, to be handed down through the generations. It is also likely that the children of the family will have worked in it themselves for many years, so they get to know all the intricacies of the business. Perhaps even more importantly, they will have had the opportunity to interact and build up an ongoing relationship with both suppliers and customers.

Buying

Many small businesses become available on the open market, either when the proprietor retires and their family are not interested or when the owner decides to embark on a different business venture. Here, the advantage is that the business will have been trading for some time and have systems in place that can either be used or modified by the new owner.

What are the financial advantages?

There is no doubt that setting up a business can be a daunting enterprise, but there are many advantages to be gained, both personal and financial. Some individuals may have the entrepreneurial drive to build their small business into a multi-national company. Others may be quite happy operating as a sole trader, making enough money to cover the monthly bills while enjoying a laid-back lifestyle.

Whatever the reason for becoming a small business owner, there are a number of financial benefits to be gained. There are a range of business expenses, such as travel, equipment and depreciation that can be offset against either personal tax, in the case of the sole trader or Corporation Tax when a limited company has been formed.

Setting up their own small business is ideal for anyone who as an idea for a product or service they would like to develop themselves. Alternatively, it might be the case that they have become bored working for an employer and are looking for a new challenge. Others may wish to change their lifestyle; the internet has made working from home incredibly easy, making it possible to change the work/life balance to suit individual circumstances.