I am a sole trader – what name do I use to invoice customers?

When you are a sole trader or self-employed the rules about what you name your business is pretty much up to you, but I would suggest you leave Nike alone.

Even so the name you trade with does have some implications that could cause you problems if you are unaware.

Watch today’s video tip to find out a few of them and what you can do to keep problems to a minimum.

I was working with someone recently and I noticed that the format of their sales invoices were inconsistent.

I TACTFULLY mentioned that I noticed the invoices seemed to change and asked them why that was as it was affecting how we did their bookkeeping.

It was another lesson to me in not assuming people know something just because it seems simple to you.

If we call the person Jane Smith and she has given her business the name Smith & Co Consulting. Legally her full business name would be: Jane Smith trading as Smith & Co Consulting. Because she and the business is one and the same – unlike with a Limited company where you are treated as separate to the company, whatever name she uses it still relates to her.

However the problems come if you are not consistent in your use.

1. If Jane was using her personal bank account for business transactions, she would have to make sure it was clear to her customers that any cheques to her would have to say Jane Smith and not Smith & Co otherwise she cannot bank it. – I know cheques are being phased out but they have had a stay of execution and many people still do use them regularly.
2. If she is using a business account when she opens the account the bank needs to know that she is trading with a business name otherwise if she receives payments with the business name she again cannot bank it. However if this is done properly the business account option is the most flexible.
3. If she registers for VAT, it is advisable to register in the trading name that she uses all the time. You need to send supporting documentation when registering for VAT so whatever you already have is ideal.
4. Even though she and the business are one. Paperwork with the business name on it does make it easier to justify and track transactions that were wholly business related to avoid having expenses disallowed because they could be assumed to be for personal use.

That’s if for this installment.