You’ve got a great business idea and you’re ready to set-up on your own. Starting your own business is a fulfilling venture, an opportunity to be your own boss and to do something that you’re truly passionate about.
But venturing into the world of self-employment can be daunting, especially if you’re a first-time business owner. If you get a few things right from the start, they’ll set you up for a smooth and efficient future so that you can focus on the day-to-day running of the business that you’re passionate about.
Business Plan
Your business plan is your business bible. It can help you to identify challenges and opportunities with your entrepreneurial idea, set out where you want to take the business, steps to help you get there, and keep you on track with your goals.
Your business plan should identify your proposed product or service, the costs involved, your funding needs, market research, your competitors, potential customers, market opportunities, and potential challenges.
Not only is the business plan super useful for you as the business owner, it’s also a way in which you can pitch your idea to potential investors or partners.
Finance
A factor that should be included in the business plan but is important enough to warrant a mention in its own right, is the factor that will ultimately keep the wheels of the business turning – money.
The way in which you raise capital for your business start-up is one of the most important considerations and often one of the biggest barriers.
You should also keep your business and personal finances separate from the start to avoid confusion when it comes to your income and expenses.
For those that aren’t braving the Dragons’ Den, business loans, crowdfunding, investors, and grants are all sources of finance that can be considered.
Judging your start-up costs, cash flow forecasts, and sticking to a realistic budget (without over or underspending) is vital to getting a business off the ground.
There are some great online tools that can help estimate new business start-up costs and it’s always a good idea to get a professional second opinion on both your business plan and your budgets from someone like your accountant.
Legal structure
Choosing the right legal structure is a necessary part of running a business, and although it can be changed as your business evolves and grows, it’s important to start-up with the right legal structure.
Your business’ legal structure determines your tax rates, management and paperwork requirements, fundraising abilities, and more.
A sole trader is a self-employed person who’s the sole owner of their business. Sole traders must register with HMRC for self-assessment as soon as they start trading and pay income tax and National Insurance via submitting an annual self-assessment tax return. Sole traders can keep their profits after tax, but they are also personally responsible for any debts of their business.
A partnership is the simplest way for two or more people to run a business together. Partners share responsibility for their business and share the business profits, with each partner paying tax on their share. Each partner must register as self-employed and submit a separate self-assessment tax return.
A limited company (Ltd) has its own legal identity which protects the shareholders’ personal assets, and it can be more tax efficient. A limited company’s finances are separate from the shareholders’ personal finances and corporation tax must be paid on the profits made from the business via filing a company tax return. Individual directors of the company must still complete their own personal tax returns via self-assessment.
Your accountant can help advise the best legal structure for your business and help you to set things up correctly.
Legal documentation
Once you have decided upon your business legal structure, you need to register yourself and/or your business with HMRC.
Depending on what your business does you may need to complete further legal documentation such as:
- Register with Companies House (if you’ve set up a limited company)
- Register for, charge, and pay VAT (if you’re taxable 12-month turnover is above the VAT threshold of £85,000)
- Licences or permits
- Insurance
- Company secretarial
- Business rates if you’re renting or buying a property for your business
- Payroll if you’re going to employ people
Systems and software
There is a wealth of software and systems that can help you to run different elements of your business efficiently.
For any business, clear and organised accounts are essential, and accounting software is a useful (and compulsory for VAT registered businesses) way of accounting for your business. See our guide to digital tax.
In addition to accounting software, other online systems that can be useful for your business are website builders, ecommerce software, CRM software, marketing software, and social media software.
How we can help you start up your business
Starting a business can be a daunting endeavour, with many factors to consider but you don’t have to do it alone.
At Chorus Accounting we can help you to cut through the red tape and support you from the very beginning of your business.
We are so much more than accountants. If you need a trusted advisor, we would love to hear your business ideas and we’ll help you to evaluate them in a constructive and realistic manner to help you embark on your new business journey.
Getting things right from the start will set you up for ease, efficiency, and success in the future.
To find out how Chorus Accounting can help you with your payroll, let’s talk. Call 01202 332500 and one of the team will be happy to help.
