Simple ways to reduce sole-trader outgoings

As a sole-trader, you not only enjoy all your business’ triumphs but also have to deal with all its troubles. You’re more likely to be in a vulnerable financial position as a sole-trader than you would be in a limited company. Therefore, smaller financial setbacks can potentially have a more damaging impact. Even more so when you consider the limited liability protection offered by limited companies doesn’t apply to sole-traders.

Fortunately, there are some simple steps you can take to reduce your outgoings, and consequently reduce the likelihood of your company getting into debt.

Compare your service costs

Electricity, water, heating and broadband can be costly, but essential outgoings for a business to make the office an environment pleasant to work in, or in some cases, for the business to operate at all. Fortunately, there isn’t a monopoly on the UK utility market; and different companies may have vastly different prices for similar services. Various comparison services are available, which gather quotes based on your circumstances. You might not save a fortune, but it’s money better in your pocket than theirs.

Make sure your overheads are necessary

When you set up, it may be tempting to get an office in the hippest, flashiest business centre in town, or sign up to every business subscription service going to give you a ‘better chance’. The harsh truth is, if these services aren’t directly benefitting your business, or bringing in new customers, they can be an unnecessary drain on your finances. While you can certainly aim for an office in a smart and trendy building, you might have to start somewhere cheaper and work your way up. The same applies to services and subscriptions; during your start-up phase, you should only pay for those essential for your operations.

Claim back what you can

When you submit your self-employment tax return, you can include receipts for various purchases made for the benefit of the business, or in order to carry out work. These costs include fuel for travel, office supplies, equipment and refresher courses. Depending on how much you spend on your business, you could save a lot on expenses. You should make sure any expenses you submit are purely for the business though and subtract any amount spent for personal reasons. It’s also worth checking what your tax allowance is before submitting.

A full list of what you can claim is viewable on

Invest in marketing, where appropriate

Marketing is essential for businesses to reach new customers, and without it, spreading awareness of you and your brand is much more difficult. While marketing isn’t something you should hold back on investing in, nor completely sacrifice if cutbacks are needed, you should look to be smarter with what you spend. If one avenue is generating loads of customers, but another isn’t bringing in new business, you might want to consider cutting back on the less fruitful campaigns. By concentrating your efforts on the more profitable avenues, you’ll be spending less money and potentially generate more leads.

Act if you find yourself getting into debt

Despite your best efforts and intents, your business could still find itself in debt. It may sound obvious, but you should work to pay off any debt accumulated as soon as possible.

If the debt has got to such a level that your business has become insolvent, and not enough money is coming in to cover its costs, you should seek professional help from a licensed insolvency practitioner. Failure to act when you fall into debt increases the likelihood of further, more drastic action from your creditors, who could force you into bankruptcy.


Being a sole-trader can be a solitary, lonely way of working, and the implications of becoming insolvent can be more damaging than in a limited company. However, there are simple steps you can take to reduce the risk of becoming insolvent. These measures include reducing your outgoings, so you’re only paying what you must on services, utilities and subscriptions, and reclaiming expenses where you can. You should consult your marketing analytics to ensure your advertising budget is returning enough leads to justify the spend. Finally, if you realise your debt has pushed you into insolvency, you must act immediately to avoid further creditor action.

Author Name: Lisa Hogg (Director & Licensed Insolvency Practitioner)

Short bio: Originally from an accountancy background. Lisa became a licensed insolvency practitioner in 1999 and joined Wilson Field in 2002. Lisa is a Director and board member and possesses a high level of technical expertise. She is involved with overseeing insolvency appointments on a day-to-day basis. 

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