Concerned about legal risk of going sole trader

in Small Biz MoneySaving
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ftsosftsos Forumite
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I have been in business almost 18 year now. Just a small business. I am kind of starting from scratch with a new business. The last few years has been terrible for me and I am now at the lowest point I have been in many years. I am normally a very positive glass half full type of person. Nothing seems to be going my way.

Anyway, I started a new business. I have always had businesses that were limited company so I started this as a limited company. I have never traded as a sole trader. I started an online learning and tutoring support business recently. It's a slow start and its not making any money, but it has potential and I am kind of exciting about growing it. But I stress I do not need it grow big, just give me a regular income and pay the people who work with me. 

My website has a forum and it does newsletter and email marketing. I want to go sole trader as it would simplify life for me and I am tired of the admin and costs associated with a limited company. However, I am almost paranoid about going sole trader from a legal risk point of view. 

I had always assumed an e-learning would be a low risk business to run as a sole trader. However, nowadays with laws for everything and almost American style suing culture, running a forum community and a learning newsletter makes me think it may be a risk. Plus I am dealing with the teenage market. Is it a risk?

Am I being paranoid and over cautious. Please advise if you can. It would help me a lot as this is stressing out a lot. Being a sole trader would be huge benefit for me. I no longer care about the tax advantages as I don't see this growing big. And should that situation come I can go back to limited company at that point. 

But the legal thing is making me worry too much. 

Thank you.

Replies

  • ftsosftsos Forumite
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    I think my fears are probably just me. Its probably something thats been drilled into me by accountants and other professionals over the decades. When I search for the main risks of sole trader, debt liability seems to be main concern. However, I am not planning on taking any loans. I have never taken loans as limited company, so I am not planning to do it as a sole trader.

    If anyone can put my mind at ease I will be grateful to you. Thanks.
  • SandtreeSandtree Forumite
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    There are always risks but there is always the option of passing off most of those risks to an insurer. 

    Limited companies are not the get out of jail free card that many think they are, directors can incur a personal liability which is why D&O Insurance exists. 
  • katieolivakatieoliva Forumite
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    I would suggest making sure that your website terms and conditions are very clear and protect you from all obvious issues.  Do your users have to tick that they agree to the terms before they purchase a lesson? If yes I would suggest focussing on these terms as a means to protect yourself. There are certain paragraphs which need to be included to comply with selling online in the UK but you can add your own sections too. Also do you have business insurance?
  • gingerdadgingerdad Forumite
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    Honestly can’t see the risk or where your worry is coming from. 

    How or why would anyone sue you?

    as a very small business it makes sense to be self employed the tax benefits of limited only really kick in over about £35k profit. 

    My wife and I have a partnership for a small shop we’ve run it for 6 years and only now looking at incorporating as it now makes sense due to profit levels and some serious capital purchases. 
    The futures bright the future is Ginger
  • MalMonroeMalMonroe Forumite
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    Please note that comments are strictly my own opinion, intended to help - never hinder. If they do not help then please ignore as the intention of the forum is to help everyone, if possible. MSE forum rules clearly state "no two people have the same circumstances or experiences and it is up to you to investigate, check and check again before you make any decisions or take any action based on information you glean from our community. Remember, don't rely on what you are reading. Verify it and protect yourself. You are responsible for any action you consequently make." It's always best to verify everything. Inappropriate comments will be reported, as per the Forum rules.
  • SandtreeSandtree Forumite
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    gingerdad said:
    Honestly can’t see the risk or where your worry is coming from. 

    How or why would anyone sue you?

    Really @gingerdad?   

    The problem is that a claimant doesn't need to have a good case to sue you and whilst you may ultimately win it sucks up vast amounts of time and potentially costs.  The OP doesn't really give much detail about the service offered but on the basis its around education then the obvious route of suing is around little Johnny not doing well enough on his A Levels after following the site's advice and now rather than being a brain surgeon he'll be a bin man and they want compensation for the loss of future earnings. 
  • edited 18 May at 10:32AM
    Mistral001Mistral001 Forumite
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    edited 18 May at 10:32AM
    The risk would also depend on whether you are referring people to tutoring services, acting as an agent for tutoring services or just advertising or marketing them.  Referring someone to a service or acting as an agent would attract some risk to you if the tutor messed up and it could be proven.  I guess one such instance is where a tutor told a client that they would prepare a student for a certain exam, but then taught the wrong syllabus.
  • gingerdadgingerdad Forumite
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    Sandtree said:
    gingerdad said:
    Honestly can’t see the risk or where your worry is coming from. 

    How or why would anyone sue you?

    Really @gingerdad?   

    The problem is that a claimant doesn't need to have a good case to sue you and whilst you may ultimately win it sucks up vast amounts of time and potentially costs.  The OP doesn't really give much detail about the service offered but on the basis its around education then the obvious route of suing is around little Johnny not doing well enough on his A Levels after following the site's advice and now rather than being a brain surgeon he'll be a bin man and they want compensation for the loss of future earnings. 
    You're talking absolute rubbish - show me cases where people are getting sued like this - it's all hearsay and conjecture and surely professional indemnity insurance would cover any mythical chance of being sued 
    The futures bright the future is Ginger
  • SandtreeSandtree Forumite
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    gingerdad said:
    Sandtree said:
    gingerdad said:
    Honestly can’t see the risk or where your worry is coming from. 

    How or why would anyone sue you?

    Really @gingerdad?   

    The problem is that a claimant doesn't need to have a good case to sue you and whilst you may ultimately win it sucks up vast amounts of time and potentially costs.  The OP doesn't really give much detail about the service offered but on the basis its around education then the obvious route of suing is around little Johnny not doing well enough on his A Levels after following the site's advice and now rather than being a brain surgeon he'll be a bin man and they want compensation for the loss of future earnings. 
    You're talking absolute rubbish - show me cases where people are getting sued like this - it's all hearsay and conjecture and surely professional indemnity insurance would cover any mythical chance of being sued 
    Insurance, as already pointed out @gingerdad, is an alternative route to mitigate risks

    https://www.city-journal.org/html/fail-me-i-sue-12368.html

    Parents engaged lawyer to deal with English teacher after kid failed their English exam, the school ultimately increased her grade rather than it end up in court.

    Unfortunately its not hearsay and conjecture, everywhere is becoming more litigious and in particular in the US where silly monies can be involved (like $1m for a school cutting a pupils hair without parental consent https://www.theguardian.com/us-news/2021/sep/20/lawsuit-michigan-school-teacher-cut-girls-hair) 
  • Mistral001Mistral001 Forumite
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    gingerdad said:
    Sandtree said:
    gingerdad said:
    Honestly can’t see the risk or where your worry is coming from. 

    How or why would anyone sue you?

    Really @gingerdad?   

    The problem is that a claimant doesn't need to have a good case to sue you and whilst you may ultimately win it sucks up vast amounts of time and potentially costs.  The OP doesn't really give much detail about the service offered but on the basis its around education then the obvious route of suing is around little Johnny not doing well enough on his A Levels after following the site's advice and now rather than being a brain surgeon he'll be a bin man and they want compensation for the loss of future earnings. 
    You're talking absolute rubbish - show me cases where people are getting sued like this - it's all hearsay and conjecture and surely professional indemnity insurance would cover any mythical chance of being sued 
    You can always be the first to get sued!   Also, while education claims tend to get reported on as they are more interesting than most civil court cases, they still might not get reported on if they are settled at an early stage of any legal action.  PII would certainly be something worth considering if the OP does not already have it.
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