Setting up a motor trade business
An essential guide to getting on the motor trading ladder
Many people dream of being their own boss and running a successful business. In the current economic climate, huge numbers of the UK population are also looking for a secondary source of income, and the motor trade offers a realistic, attainable means of both becoming self-employed and earning more money.
Read our guide on the basic essentials you need to get started:
Initial capital and basic knowledge
In order to get on the first rung of the motor trading ladder, all that’s required is sufficient capital to purchase a first vehicle and an internet connection to advertise it for sale. Of course, some real knowledge of the motor industry is a prerequisite, and an understanding of vehicle mechanics coupled with a firm idea of vehicle values is essential for those serious about entering the motor trading business.
Getting all of this in place can take time for those with little experience inside the industry, although there are plenty of people who’ve served their time, perhaps as sales assistants in car dealerships, who now feel ready to take the plunge into the world of self-employment.
With knowledge and experience in place, the next step should be finding adequate motor trade insurance. It’s not just a necessity, it’s a legal requirement. There are insurance services available which can cover building and contents insurance, as well as public liability and other risk factors involved with running a business from home. Record keeping is a hugely important aspect of running a business.
Good, detailed records provide proof to insurers that trading has been taking place on the premises in the event of a claim. It’s wise to keep all forms of documentation such as sale receipts, logbooks, receipts for parts purchased and receipts for advertisements taken out – receipts for all costs essentially. In addition to this, all vehicles bought and sold must be added (and removed) from the Motor Insurance database by the trader.
Organisation and finances
Organisation is paramount when it comes to running a successful motor trading company. As explained earlier, it’s important to keep any documentation – and it’s also just as important to keep a diary. Day-to-day tasks which may seem menial can end up making colossal demands on valuable time, and planning a daily or weekly workload effectively via a work management diary can help keep things on an even keel.
It may be worth considering seeing if you can get a Start Up Loan (external partner site, link opens in a new tab) to help you with financing, and mentoring to start this business idea. You'll also need to think about registering your business, either as a sole trader or as a company - if a company, then Smarta Formations (external partner site, link opens in a new tab) are an organisation that can help you set up.
In order to keep track of finances, it’s worthwhile for motor traders to set up a business bank account, transferring any wages into personal or current accounts. That way, it’s easy to keep track of any incomings and outgoings.
Self-employed motor traders also need to be aware of their responsibility to HMRC. Completing annual tax returns is a legal requirement, as is registering for VAT if yearly turnovers exceed £73,000. Again, this is where record keeping comes in handy, as proof of incomings, outgoings and net turnovers.
Ultimately, the best advice for people wishing to get started in the motor trade is simply to start trading. With insurers making it easy to sort out policies quickly and easily, it can be reasonably straightforward to get things up and running. The sooner a business is fully operational, the sooner the revenues will start coming in.
Trade Plan Insurance is a market leader in the motor trade insurance market. Visit www.tradeplaninsurance.co.uk for a quote.