united-kingdom, business-structureI’ve noticed that when it comes to tradesmen (plumbers, carpenters, electricians, etc.) most tend to operate as sole traders rather than in most other fields where professionals might build a big company and get brand recognition. I’m wondering whether there’s a good reason for this. I personally don’t see one.
So if I’m a skilled tradesman, is it a good idea to try and build up a larger company with many tradesmen or are there benefits to remaining a sole trader? It seems to me that remaining a sole trader, like in other industries, means that I don’t have the economy of scale that a larger business would have, nor the same resources for advertising, and so being a sole trader might be disadvantageous. Why, then, are tradesmen almost exclusively sole traders or at least very small outfits?
I suspect it is to do with that tradesmen are B2C while most professional people are B2B.
Sole traders will have a better chance of staying under the VAT threshold, so will be able to charge 20% less.
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