The Safety Net - Terminology
Thursday April 7, 2016
Dear Nettie @ The Safety Net
I was told you may be able to help me – I have recently become a sole trader and I am happy I know who my customers will be, and that I can do the job required.
However I am really confused about some terminology that was used the other day by someone who thought I would know what they were talking about – they were using terms like turnover, profit, dividends, payroll, tax etc etc – do I need to worry about all this?
Would appreciate your help – Julie
Thanks for the email and I will certainly try and help you out. However we will have to talk broadly at this stage as I don’t know what the business will be doing or your anticipated income.
Firstly, I am assuming you have registered yourself as a sole trader by taking some professional advice, if not, please do come back to me to ensure that being a sole trader is the right route for you, as opposed to forming a limited company.
With regards to the various terms you have used, I can give you brief explanations, but they would be better addressed in a meeting to discuss your plans for the business and therefore the right context.
For example, simply put, the definition of ‘turnover’ would be ‘the amount of money taken by a business in a particular period’, the ‘profit’ would be ‘the difference between the amount earned and the amount spent in buying, operating, or producing something’ and dividends would not be relevant to a sole trader.
However, l can’t begin to answer many of your questions without a more in-depth conversation about your business, the requirements and your plans and I can’t suggest strongly enough the importance of the right and relevant advice throughout the lifetime of your business.
Sadly too many businesses aren’t successful simply because they have not ‘surrounded themselves with the right people’, who can answer and help with the information required in a way that’s both relevant and easy to understand.
I wouldn’t suggest you worry about all this terminology, I would suggest we set aside some time to have a proper chat about your business and continue this process as the business develops and grows.
Please feel free to contact me to arrange a time to talk – I look forward to hearing from you
Best regards Nettie