So you’ve decided to start your own business! You’ve taken the plunge and thought ‘I know what I want to do’. Thats the easy and first step. Detailed below is a review of a few considerations and tips that you should think about when setting up your business.
Consider your business structure
You will need to decide what is going to be the best structure for your business. Do you want to be a Sole Trader or a Limited Company (Or LLP, Parnership!). There are different taxation, legislatory and administration implications with each. It may also be that your target customers/ potential suppliers may rate your credibility higher if you are a Limited Company. It is also possible to protect a business name if you set it up as a Company. If you are unsure about what structure is best for you then you should certainly speak to an accountant. VAT registration is also an important point to consider as it may be in the business interest to voluntarily register early.
Register with the Authorities
The first thing you must do is register with HM Revenue and Customs. If you have set up and incorporated a Limited Company they should automatically send you a notification form CT41G to complete and return; However, as a Sole Trader you will need to register directly by completing a form CWF1. This can also be done online by going to the HM Revenue and Customs Website. It is important to note that trading is when you first actively seek business, not necessarily when you first perform actual work. There are fines and penalties if you do not register within certain time limits.
Open a business bank account
This is one of the most important things that you need but is often overlooked. It is vital to keep your personal and business affairs seperate. You should ensure that you get a good deal, particularly in the first year. If you do not need a lot of financing you should be able to get free banking for a couple of years. Often banks will offer cheaper rates for online transactions when you have to pay. A good tip is to encourage your suppliers to pay you online anyway as it can improve your cashflow.
Working Capital and Financing
You will need to identify what funding you will need to get your business up and running. There may be initial capital purchases such as computer equipment, machinery or furniture. Other overhead costs may be payable up front such as advertising, premises rental etc. In order to do this you may need to borrow from the bank or another source; however, before you go down that route, why not see if there are any grants available. Speak to an adviser from an organsition such as Business Link as they may be able to help with this.
Get your business in the public domain
You may already have some customers in mind to get you started but you will certainly be after some more! You need to get your business marketed. This can often be difficult in a startup business, particularly because of budgeting constraints. Get yourself some business cards. As you will be meeting people and promoting your business you will want be giving out plenty of these. It is worth spending a few pounds on these rather than going for some of the
cheaper options around; however, if funds are really limited it is more important to get your name out there.
You should certainly be building yourself a web presence. Again, domain names and websites can be purchased and built cheaply where necessary. These should be purchased as early as possible. There are also several other ways of building your web presence. Get your business listed on the Google Local Business Centre. This often appears top of the Google Map rankings when searched for. There are also many directories, such as Wiltshire Way, where you can add free directory listings. A key tip is to get yourself listed on various web based forums, such as 4Networking, which allow you to add a business profile. This can really help you improve your rankings as you can include your key search terms in your profile. Get involved in the forums too as any signaturelinks and content will also help your rankings.
Face to face networking is also an excellent way to promote your business and get you talking to people. Organisations such as Wiltshire Business Club are well worth joining.
Administration and bookkeeping
When you are running your business you need to ensure that you have appropriate bookkeeping measures in place. HM Revenue and Customs and the Companies Act require you to keep up to date records in order that tax liabilities can be accurately calculated. It is also a good idea to be on top of this so that you are aware of the business position i.e. monies it owes and monies it is owed. A record should be kept of your invoices issued to customers and expenses paid
out to suppliers. You may also need to keep other records such as a mileage log.
Setting yourself up with a good bookkeeping system is important. There are various packages out there and you will want to find the one most suitable to you. If you are uncomfortable with doing it yourself then consider contracting a bookkeeper or accountant to help you with this. A good virtual assistant will be able to help you with your bookkeeping and general business organisation.
The bookeeping records will be used to complete your end of year accounts and tax returns. There are differences between Companies and Sole Traders as to what type of accounts are prepared and submitted to authorities. A company must file accounts with Companies House, a public record, and submit a Corporation Tax Return to HM Revenue and Customs. The Company accounts have to be prepared in a pre-defined format in accordance with the Companies Act. A Sole Trader must prepare a tax return for submission to HM Revenue and Customs. There is not a requirement to prepare accounts but these are usually the basis of the tax return. It is certainly worth speaking to an accountant when you first decide to start a business. Most will give an hour or so as a free initial consultation so why not try out a few and go with the best one that suits your business.
Employees and other service providers
You should consider what Employees you may need within your business. There are legal and regulatory issues to consider when employing people. It may be that initially employing people is not right or too expensive and you may want to sub-contract some of your business needs.
Legal/ regulatory issues
Ensure that you have an understanding of any issues that may affect your business. This can include Health and Safety Legislation or Employment Law, as well as anything specific to your industry.
The above is quite a detailed review of what you need to think about when starting your business. It is always recommended to speak to a professional adviser from the outset and actually document a plan of what you are going to do. If you want any further information or advice, don’t hesitate to contact PAH Accounting and see how we can help.