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Business Insurance for BARBERS

Wouldn’t it be great if there were an insurance product that offered an all in one service for Barbers, that you can customize to YOUR needs?

Public Liability, Equipment Protection (anywhere in the UK + temporary cover anywhere in the world), Cover for remote barber services (exhibitions/events/private call outs) and Employers liability are all area’s any barber could benefit from, but probably don’t know exist for their industry! Ask yourself, how much would it cost to replace all my equipment? Your tools are your trade.

The good news is, we’ve got you covered. Affordable, Flexible, monthly cover in less then 10 minutes. Bespoke adjustable cover for YOUR needs, amend as you need, with no fees for amendments or cancellation.

Best of all? WE will pay your first month (you heard right, the first months on us and you can cancel anytime)

Sole Trader or Limited Company?

An area not understood or spoken about enough. Understanding the differences between being a “sole trader” and a “limited company” is key.

As a sole trader, you are the self employed business owner and business, both are treated as one legal entity. With a limited company, the business is seen a standalone legal entity that is separate from its owners, or directors.

Why is this important? As a sole trader YOU are responsible for unlimited liability for both personal and business debts so personal assets such as your house or car could be at risk if something were to go wrong. In contrast, a limited companies finances are separate from the owner/directors personal finances, meaning they/you are only responsible for the amount of money they/you put into the business.

Advantages & Disadvantages – Sole Trader 

Advantages 

• Smaller amounts of paperwork – you will still need to submit your annual self-assessment tax return and some basic record keeping.
• Start Immediately – no requirement to register a company with HMRC (although this only costs £12 and takes 24 hours)
• More Privacy – your companies finances stay private vs anyone with access to Companies House can view a Limited Companies financial returns.

Disadvantages 

• Unlimited Liability – As mentioned above, you take on all risks associated with running your business meaning you hold all responsibility for its debts. You may need to sell off personal assets to pay those debts if you are unable to find the money.
• Less credibility – Some companies choose not to work with sole traders due to the lack of legal protection offered vs a limited company.
• Less tax efficient – Sole traders will pay between 20-45% income tax vs compared to limited company owners who pay 19% corporation tax. As a sole trader you are taxed on the profits or losses of the sole trade, regardless of what profit you physically withdraw from your bank account. Therefore, when your business is doing well, and you find you can afford to leave some of the profits made in the business, it may be time for you to look to form a limited company.
• Minimal funding opportunities – As a sole trader raising business finance can be tough, lenders or investors typically tend to favour limited companies.
• No protection for your business name – Unlike a limited company, your business name is not protected. Meaning anyone can trade under the same name you have, which could lead to confusion.

Advantages & Disadvantages – Limited Company

Advantages

• Limited liability – A limited company is legally separate from its directors/owners meaning you are not personally liable for any losses made by the business.
• More tax efficient – By running your business as a limited company you have the potential for more profitability. A Limited Company pays 19% corporation tax so they tend to be more tax efficient. Limited Companies also qualify for a range of allowances and more importantly, tax deductible expenses.  Shareholders can also withdraw dividends (cash payments) from the business which do not attract National Insurance Tax and also have a lower income tax rate than a salary, making them very popular.
• Funding opportunities – Being a limited company opens you up to more opportunities when it comes to accessing funding due to legal protection and tax benefits.
• Credibility – Operating as a limited company can encourage more confidence and therefore trust, among customers, suppliers and investors. Some businesses will not work with non-limited companies.

Disadvantages

• More complex then a Sole Trader – A limited company involves more paperwork and admin vs operating as a sole trader. You will need to file annual accounts to Companies House, file company accounts and tax returns to HM Revenue & Customs (much like the annual accounts a Sole Trader will issue), following PAYE procedures and file a Confirmation Statement to Companies House.

Thankfully there are a multitude of online accountants that will offer a competitive one off fee to submit this for you. Accountants will often pay for themselves with the tax savings/benefits they can advise you on.

Final thoughts on the above– Now you should understand the differences between being a Sole Trader vs Limited Company, the choice is in your hands. One area is that is standout is around liability, for a Limited Company a dedicated Business Bank Account is required by law, for a Sole Trader the choice is yours. Many Sole Traders chose to open a dedicated Business Bank Account regardless to keep personal and business finances separate, which is essential for accounting and tax purposes.