STARTING UP IN BUSINESS

INITIAL CONSIDERATIONS

In order to make your business a success there are a number of key factors which should be considered:

• commitment - starting a business is demanding. Determination and enthusiasm are essential
• skills - you will need managerial, financial, technical and marketing skills. If you do not have these skills personally, they can be found in a partner or employee, or acquired through training
• your product or service should have a proven or tested market, but must not conflict with the patent or rights of an existing business.

In addition to these general considerations there are a number of more specific matters.

The business plan

The business plan is the key to success. If you need finance, no bank manager will lend money without a sensible plan. It should be a working document that measures the performance of your business.

Business structure

There are three common types of business structure:

• Sole trader
  This is the simplest form of business since it can be established without legal formality.
• Partnership
  A partnership is similar in nature to a sole trader but because more people are involved it is advisable to draw up a written agreement and for all partners to be aware of the terms of the partnership.
• Limited Company
  The business affairs are separate from the personal affairs of the owners, but there are legal regulations to comply with.

The appropriate structure will depend on a number of factors, including consideration of taxation implications, the legal entity, ownership and liability.

Business stationery

There are minimum requirements for the contents of business stationery which will depend on the type of business structure.

Accounts

The books and records are used to produce the accounts. If the records are well kept it will be easier to put together the accounts. Accounts must be prepared for HMRC and if a company is formed there are strict legal requirements as to their format.

A company and a LLP may need to have an audit and will need to make the accounts public by filing them at Companies House within a strict time limit.

Taxation

When starting in business, taxation aspects must be considered.

• Taxation on profits
• National insurance (NI)
• Value added tax (VAT)
  When starting a business you should consider the need to register for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register.
  Expect a visit from HMRC within eighteen months of registration. This inspection of your records ensures VAT is being properly accounted for.

Books and records

All businesses need to keep records. They can be maintained by hand or may be computerised but should contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you are considering purchasing a computer to maintain your records, obtain professional advice.

Premises

There are many pitfalls to be avoided in choosing a property. Consideration should be given to the following:

• suitability for the purpose
• compliance with legal regulations
• local by-laws
• physical restrictions such as access.

Insurance

Comprehensive insurance for business motor vehicles and employer's liability insurance are a legal requirement. Other types of insurance such as public liability, consequential loss, business assets, Keyman and bad debts should be considered.

Pensions

Putting money into a pension scheme can be a very attractive way of saving for retirement because of the favourable tax rules. Many companies have to provide access for their employees to a stakeholder pension.

Employing others

For the business to get off the ground or to enable expansion, it may be necessary to employ staff.

It is the employer's responsibility to deduct income tax and national insurance, and to account for student loan deductions. The balance must then be paid over to HMRC. Payroll records should be carefully maintained.

You will also need to be familiar with employment law

HOW TAXSENSE CAN HELP

Whilst some generalisation can be made about starting up a business, it is always necessary to tailor the strategy to fit your situation. Any plan must take account of your circumstances and aspirations.

Whilst business success can never be guaranteed, professional advice can help to avoid some of the problems which befall new businesses.

We would welcome the opportunity to assist you in formulating a strategy suitable for your own requirements. We can also provide key services such as bookkeeping, management accounts, VAT return and payroll preparation at an early stage.

TOP TIPS

What you need to start up
Many people want to run their own business but must ensure they have a clear vision of what they want to achieve and the mental strength to accompany it.
Getting a decent start
Putting the correct systems and procedures in place can help start-ups remain in control of their business and manage cashflow effectively.
How to help secure investment
Companies looking to boost their market value or convince stakeholders of the potential future performance need to have a framework that measure the value of their employees.
Networking
A vital part of relationship building. So from the beginning start thinking about furthering your networking activities.
 How to market on a shoestring
An economic downturn calls for imaginative thinking about how to market your company without spending a fortune
How to make a good first impression
Most customers prefer to be greeted using their full names, research shows. But this isn‘t the case for everyone
Do you make the most of pitches?
Small businesses are failing to convert client meetings into business deals
How to boost sales in a downturn
With challenging economic conditions it’s suddenly become much harder to win new business. But going back to basics can help boost performance while competitors struggle
How to learn from complaints
Handling customer complaints is an inevitable part of running a small business. But companies that know how to handle them can gain customers and retain staff.
How to road-test your business
With the majority of new business ventures failing, it’s not surprising many would-be entrepreneurs are put off starting up. The trick is to be prepared to ask some tough questions while retaining the confidence to go for it
Why you must chase up debts
The average small business is owed £30,000, an amount that would prove fatal for at least three in 10 firms, research by BACS Payment Services reveals

For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.