So you’ve got a great business idea and you’re keen to get started but not sure of how to proceed? There are a few things you need to look at and consider before diving in:
• What structure will be best for your business? Most usual options will be sole trader, partnership or Ltd company. All have advantages and disadvantages.
• Is this going to be a full time business or are you going to start part time and build it up? No matter how you are going to start, do you have sufficient funds available to keep the business going long enough for the income to start arriving?
• What are you going to call your business? A good, easy to remember name can make a great deal of difference and the name should match the type of business and the image you want to portray. You will need to check that someone else isn’t already using the same name to avoid confusion – and court cases.
• Are you going to rent, lease or buy premises or will you work from home? Working from home will be cheapest but may not be practical. If you are going to rent, lease or buy premises consult a solicitor about any agreement you are asked to sign.
• Who do you need to inform? At the very least you need to inform HMRC (the tax man) that you have started a business. There are statutory time limits for you to do this. Some types of business will have to register with various authorities and possibly obtain licences. If you are becoming a subcontractor in the construction industry, you will need to register as a subcontractor – otherwise you might not get paid.
• What about VAT? You don’t have to register for VAT until your turnover reaches the statutory threshold but sometimes it can be advantageous to do so, particularly if all of your customers will be VAT registered businesses.
• Will you need to employ anyone? If so, you will need to set up a PAYE scheme with HMRC. Don’t be tempted to pay cash in hand because it appears simpler. If HMRC find out that can become very expensive.
• Finally, are your family (husband, wife, partner, children etc) prepared to support you? Do they understand the implications and possible problems ahead? Make sure they do. You will be preoccupied and have highs and lows which they will have to cope with. Family support can make a tremendous difference to your success or failure.
We recommend that you discuss your plans with an accountant (we would, wouldn’t we?). Most accountants offer a free consultation and they can cover the above points in much greater detail. We’d like it to be us because we enjoy helping people make a success of their idea but, if not, we wish you every success in your venture
