Everything You Need To Know About Sole Trader Cover
Taking the step to monetise your crafting hobby can seem daunting; more of a leap into the unknown than an orderly walk in the park. However, although there are obviously unknown factors, there is much you can do to minimise the risk and establish yourself on good footing from which your business can flourish.
Once your vision has grown into a viable business plan, via some market research, costings and financial forecasts, you will need to register with HMRC for self-assessment as either a sole trader or a limited company. As a sole trader, you will need to fill in a tax return each year. You have two options for how you do this; on paper or digitally. Paper returns must be in by the end of October and digital ones by the end of January. You will need to keep a record of all your outgoings (with tax receipts) and the income you receive from sales.
As a sole trader, you also need to look at what insurance you need. Working out what sole trader cover consists of and what you need for your unique business can also seem somewhat daunting, but it really doesn’t need to be so. If it’s all new to you, finish reading this blog, then check out our website including the FAQ’s, and then simply give us a call. We are a family run business ourselves and this means that we communicate individually with each of our customers. You won’t have to wait for a long time in a queue and will speak to either Sam or Naomi in our office.
Sole trader cover includes four main areas of insurance: public liability insurance, product liability insurance, employers’ liability insurance and business items cover.
Public liability insurance covers you for any claims made against you by a member of the public for damage or harm they believe has been caused by you or one of your employees or volunteers, while you are out teaching, demonstrating or selling your crafts. Even if you are not at fault, this insurance will still cover you for compensation or legal fees.
Product liability insurance provides cover for any claim made that one of your products has caused harm or injury to a member of the public. Again, even if this is not the case, you will still be covered. Neither public nor product liability insurance are a legal requirement, but they are well worth having. Despite all the risk assessments of your work and selling space and the rigorous testing through which you put your products, you cannot prepare completely for the unexpected. This is the reasoning behind taking out public and product liability insurance. We sometimes call it ‘sleep easy’ insurance as, once it is in place, you can forget about any potential mishaps and focus on what you do best; creating beautiful products for your customers to enjoy.
The third part of sole trader cover is employers’ liability insurance. Unlike public and product liability, this is a legal requirement if you employ staff or have volunteers or work placement students working for you. It covers legal costs and compensation for any claim made for injury or illness that is a result of the work they do for you. The price will be based on the number of employees and volunteers that you have, and the package includes zero excess.
The final segment of sole trader cover is business items cover. This allows you to insure any specialist equipment used for your craft, as well as completed stock products and raw materials. You might also consider covering electronic items used at your base and when you are out and about selling, demonstrating or teaching. These could include laptops, electronic card readersand cameras. Like public and product liability, single items business cover is not a legal requirement. However, it makes sense to purchase it if you have equipment in which you have made a significant financial investment, which would be difficult to replace and without which your business could not function. This could be specialist equipment such as a potters’ wheel or kiln, or a general laptop from which you run your website, receive orders and communicate with customers and business contacts. Business items insurance will cover you for breakages, damage and theft.
In an increasingly difficult and uncertain financial climate, we all need to make tighter decisions about how we spend our limited financial resources. Employers’ liability insurance is a legal requirement, but it is for you to weigh up the pros and cons of the other three. To do this, it is good to have as much information as possible and to ensure you are only paying for a product you need. It could be helpful to think through the impact on your business if a complaint wasmade against you, or if a piece of equipment was damaged or stolen. Would you have enough of a buffer to replace or cover liabilities?
To keep costs to a minimum, you will need a quote based around your particular business and requirements. This is where we at Craft Insurance can help in that before we give you a quote, we will ensure we have a good understanding of your business situation and needs. We are a business of generations, learning from those who have worked in this arena before us. Our speciality is insuring those who sell, teach or demonstrate their craft, and we have many years of experience doing this. Family is important to us, and we love hearing about each of our customers’ businesses, which have often been built around their own families and have included family members as they have grown.
So, if you are a crafter who is considering setting up as a sole trader, or if you have been running your own business for a good while but would like to take a fresh look at sole trader cover, give us a ring or drop us a line and either Sam or Naomi will be here to talk with you.