According to data released by Bank of England, the rise in self-employment figures is down to people working longer and the higher number of women in the workplace.
Although the increased number of people who are self-employed has been attributed to those who are struggling to find work, the information provided by Bank of England indicates that it is due to a flexible economy.
The recently published report states that a large percentage is due to trends that commenced before the recession. The Bank of England figures show that 50 per cent of the increase since 2004 is due to ‘silver entrepreneurs’.
During the last quarter of 2013, 39 per cent of self-employed people were aged 65 and above, in contrast with those aged between 25 and 34, who accounted for just 10 per cent. Another report published last year by Future Laboratory said that businesses that were owned by those aged 50 and above had a 70 per cent chance of still being solvent after five years, whereas the percentage lowered to 28 per cent for younger business owners.
According to the Bank of England, the success of older entrepreneurs could be due to their increased experience and knowledge in the fields of business and commerce.
More women have entered the labour market, according to the Bank of England data, which could further account for the rise. Self-employment offers flexible working hours – one of the reasons that many people decide to launch their own commercial ventures. The most common business structures are partnerships, sole traders and limited liability companies.
Sole trader vs Limited company
There are pros and cons to be considered for both types of business structure. A sole trader has simpler administrative duties, although being responsible for the business debt could result in loss of personal assets. A limited liability company offers protection against losing personal assets, but requires much more administration.
A company director has responsibilities they are legally obliged to fulfil. A sole trader can start a business once they have informed HMRC, while forming a limited company is a little more complex, although an accountant can deal with the whole process on your behalf. There are tax benefits if you form a limited company, while a sole trader may have to pay the higher rate of tax on some income.
For more information, please contact us here at The Accountancy Partnership.
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