When you're starting up, there are many decisions to be made - what sort of website do you want? Is neon green appropriate for your logo? And what tax structure is best for your business? Richard Maxted is the founder of custom cocktail events business Mix & Muddle. Here he chats to us about why he's happy to remain as a sole trader at this stage in his business journey.
Many people are surprised to learn that my company is still classed as a sole trader company, three years after forming. I question their questioning eyebrows, after which there’s often a long pause… followed by the comment, ‘I just thought you’d need to be Limited.’ Fair point in this corporatised world of ours, but the truth is quite the opposite.
Firstly, to give some context; I own and run Mix & Muddle, a specialist cocktail events company that designs bespoke, concept-driven cocktail menus for each and every event we service. From scratch. Every time. We work chiefly with marketing and PR agencies on brand launches, as well as at corporate events, VIP festival bars, and private parties. In addition, we also supply some staffing and offer a consultancy service. A consumable may be our trade, but a personality is what drives our business. Much like Virgin, it’s a brand built upon an individual. I realise that now. A business connection celebrating the creativity of individual human beings, as opposed to marketing messages and product, even if the product is the showpiece. It’s the reason we’re now launching a cocktail and comedy web series this summer, Mix & Muddle LIVE, to showcase and celebrate the personalities of spirit brands.
When starting my company in 2015, my default was to instantly look into becoming Limited from the off. I thought this is what ‘real businesses’ did when they started out, as opposed to what realistically fitted my own business. I suppose it’s a matter of mental preparation for a venture; a series of ticks in boxes that eventually equal ‘a business’. There’s also a desire to create an almost magical aura of professionalism around what you do, and becoming Limited can instantly feel like you’re achieving this. However, I soon realised that professionalism is a state of mind, and simply an approach to everything you do. I also realised that the corporate tax system is massively complicated, and I didn’t want this issue to sap my time, energy, and money. Andrew Marr’s article in the Evening Standard on the 23rd March 2018 sums this up well.
One thing I would advise however right at the outset is to register with Companies House to protect your company name. Even if this is via a virtual office (private renters, I’m looking at you). You can then keep it dormant until you’re ready to become Limited, maybe one day in the future.
I’m a big fan of the lean business model, avoiding large upfront costs, and instead focussing on the core of the business, namely product and brand ethos. Intentionally, I had very little capital when starting out other than the Start Up loan from Virgin StartUp to enable me to purchase a van, so I needed to get my business up and running quickly. As time went on, the thought in the back of my mind kept creeping forward to poke me in the eye and say ‘you should become Limited…surely you should be Limited! Why not go Limited?’ Each time a client sent me a new supplier form, my stomach would churn slightly, having to write ‘Mix & Muddle is a sole trader company, with its registered address…etc’. However, the more investigations I made, the more convinced I became that remaining a sole trader wasn’t hindering me, and was actually saving me tens of hours of unnecessary extra admin.
One of the biggest benefits to emerge from operating as a sole trader has been the element of trust. Most of my business results from word-of-mouth and recommendations, and although I believe that the “Mix & Muddle” brand is strong, people chiefly associate the business with me personally. At first I thought this was bad; but in fact history shows us that a strong connection with an individual in business creates a longer lasting relationship. Again, look at Virgin…
Of course, there are risks. The most prominent of these is liability. If something does go wrong, the buck stops with me personally. I am liable, not the company. Also, all money in the business is classed as personal money; there’s no separation. A potentially scary prospect if you’re trigger-happy with contactless. This makes product and public liability insurance (and if applicable, employers’ liability insurance) priority concerns from the outset. There are of course exceptions to the sole trader route; if you deal a lot with the public sector, for example, becoming Limited early on might improve your chances of winning contracts, if only for liability reasons.
I guess it’s a matter of what your own expectation for progression is, and what that realistically means to your business. We live in ridiculously fast developing times, where we’re told about businesses that start one year, and rapidly grow to become billion pound companies the next. This simply can’t be the case for everyone! If you want to aim for that, good on you - go for it, think big. Many of us, however, are happy to grow our businesses steadily, and make corporate leaps at the appropriate times. I’ve set a personal goal for my own company to become Limited by our fifth year of trading, when our turnover and tax implications make this the preferable route.
My advice? Keep it lean, keep it clean, and embrace your sole trader vibes. No one should be judging you for it, including yourself.
The information contained in this website is provided for information purposes only and is not intended to constitute legal advice on any matter. Use of this website is at users own risk and is not intended to create a lawyer-client relationship between Virgin StartUp and any user. Information displayed on this website is provided “as is” and Virgin StartUp does not provide any express or implied warranty or representation concerning the information, including but not limited to the accuracy or appropriateness of the information. Virgin StartUp recommend that users seek their own legal advice before taking (or refraining from) taking any action and do not accept any liability in respect of any actions taken or not taken based on any or all of the information displayed on this website to the fullest extent permitted by law.