If you’re thinking of starting up a business or even if you are a seasoned business owner considering a new opportunity we can help you.
If you are thinking of buying or selling a business please click here for our corporate finance section.
The first thing you will need is an idea that you can turn into a product or service then convert that idea into a feasible plan.
Choose a business structure
When you start a business you must choose a business structure. Your legal responsibilities will be defined by the structure you choose.
Most UK businesses with a profit motive are one of the following;
We will help you to choose the correct structure for your circumstances. If you decide to incorporate a limited company we’ll do it for you at a great value fixed price. If you would like to incorporate a limited company, please email us or call one of the team on 01952 727177 or 0121 236 7585.
More information on different business structures can be found below.
The Business plan
The primary objective of your plan should be to identify a clear strategy and objectives for your business normally for the next 1 to 3 years.
If you are looking to raise finance for your business you should produce a detailed, credible plan that stands up to scrutiny, a lender may request this, again we can help you with this.
Your plan should be realistic otherwise it may be counter-productive, credibility can soon be lost as a result of over optimistic forecasts.
Your market and competition should be analysed to define where you fit and who your customers are.
Until you know what you are going to offer, what your point of difference is and who your customer is, you should not continue.
Other items to consider;
- Marketing and sales, where do you position your product/Service in the market?
- Pricing Strategy, are you looking to undercut the competition or provide a premium offering? Consider the 4 Ps.
- Which suppliers are you going to work with?
- Do you need to employ any staff?
- Do you need any premises?
We would also recommend that you produce a S.W.O.T (Strengths, Weaknesses, Opportunities and Threats) analysis, which helps to focus direction.
Funding and Working Capital
Depending on the type of business you are looking to set up, there may be a requirement to fund the start- up. If you need to purchases equipment, secure premises or invest in marketing activities and cannot cover the cost yourself you will need to seek funding. We can help you choose the right type of funding with the best fit for your business.
The government currently offers a number of schemes including government grants, publicly backed finance and loans and mentoring opportunities.
Bank Loans are an option for funding your start up, however you will need to prove that you can repay the loan and provide realistic cash flow projections. You may also be asked to provide personal guarantees or security for the lending.
If mainstream loan finance is not your thing, you could consider selling a share in your business to a family member, friend or associate or by looking for sources of equity funding such as business angels, venture capital, crowd funding or peer to peer lending.
If you are running your own business as an individual then you are a sole trader! Your business profits are subject to Income Tax and Class 4 national insurance contributions.
As a sole trader you can be an employer, so you don’t have to work alone, but have sole responsibility for managing the business.
Sole trader status means that you are personally responsible for any losses the business makes, paying the bills for stock/equipment/services and for keeping records of your businesses sales and expenses.
You must register with HMRC as soon as you start trading and you must complete a self assessment tax return each year.
As with any business if your turnover exceeds £79,000 you must register for VAT.
In an ordinary business partnership, you and your partner or partners share responsibility for the business. You share the profits of the business and pay Income Tax and National Insurance contributions personally on your share.
As is the way with a sole trader you are also personally responsible for your share of the losses and bills.
A limited company can also count as a legal person and be a partner in a partnership.
A nominated partner must be chosen as who is responsible for maintaining business records and for managing tax returns.
Each partner must be registered for self-assessment in order to pay tax on their share of the partnership profits. Each partner must submit an individual tax return and pay tax/national insurance.
The £79,000 turnover limit for VAT registration also applies to partnerships.
Limited Liability Partnerships and Limited Partnerships
Limited Liability Partnerships work in the same way as an Ordinary Business Partnership except for that the partners in a LLP are not personally liable for the debts of the business.
Limited Partnerships are a hybrid of the two whereby debts that cannot be paid by the business can be unequally shared. So general partners can be personally liable for all partnership debts whereas limited partners are only liable up to the amount they initially invested in the businesses.
A limited company is an organization that you can set up to run your business. It is a separate legal entity in its own right and has responsibility for its own finances and debts separate to your own.
The Company pays corporation tax on its net profits any remaining profit (distributable profit) can be shared by the business owners (its shareholders/members), issued as dividends.
The directors have responsibility for running the company in the correct manner and can also hold shares, but they do not have to.
Most limited companies are limited by shares which means that if the company goes bust the shareholders responsibility is limited to the value of the shares they own, whether paid for or not.
A limited company must be set up with Companies House and must be registered with HMRC for taxes.
Each year the company must;
- Prepare statutory accounts and submit to Companies House
- Submit an annual return to Companies House
- Send a Company tax return to HMRC
The £79,000 turnover limit for VAT registration also applies to Limited Companies.
If you are a director of a Limited Company you must submit a self- assessment tax return and pay tax and national insurance through PAYE if you are paid a salary through the company and income tax on Dividends received and other sources of income.