For most startups in the UK setting up a business is quick, cheap and easy. In fact it’s just about possible to set up a business in a day! If you know what business you want to start, you’ve given it some though, you have read all about it.. its always better to start sooner than later. This article will help you set up your business in 8 easy steps and you could be up and running in no time:
Step One: Choose a Name
Search Google and Companies House to see if the name you want is available, remember to read the rules on company names. In a lot of cases using your own name can be sensible, especially if the business focuses on you giving a service – eg. Steven Hawk Butchers – never invest in printing and brand materials until you’re sure. It is also worth checking if the domain name is available by using GoDaddy.
Step Two: Get Insurance
Insurance can protect you and your business against risks including accidents, sickness, theft and legal fees. The cover you need will depend on the nature of the business and how you run it. When you’re sure about the insurances you need, shop around for the best deal.
Step Three: Get a business bank account
Whether you’re legally obliged to have a business bank account depends on your business structure, but having a business bank account can be a good idea for most businesses, even freelancers and one-man-bands. While it’s advisable but not compulsory to have a business bank account if you’re a sole trader, if you’ve set up a limited company it’s mandatory to have a dedicated bank account for your business, as your business is legally a separate entity. We have a short guide here.
Step Four: Business Compliance
I know its boring but make sure that you satisfy all regulatory issues eg. health & safety, licensing, data protection. Gov.uk has some great tools to take you through this. This only takes a few minutes and is straightforward for most start-ups.
Step Five: Sort out where you will work
Your Local Authority should be able to provide information about business premises and rates in your area. If working from home, before you shop for office equipment make sure you understand:
There are two ways of calculating home working expenses, the simplified business expense and actual cost method. A sole trader can elect to choose which one they use, while limited companies are required to use the actual cost method. Under the actual cost method you can include:
- Rent
- The interest on your mortgage (you cannot, however, deduct part of the capital repayments)
- Council Tax
- Insurance (unless you have separate insurance for your business, in which case you can deduct the full cost)
- Repairs and maintenance
- Heating, lighting and electricity
- Water and sewerage
- Phone and broadband
- Cleaning
If you work online most of the time, you might want to check out co-working opportunities in your area, where you can rent a desk for a few hours or full-time. Co-working can be a great way of over-coming isolation and instilling routine and discipline when you’re starting out.
Please talk to us if you want any help around what you can claim to maximise your tax deduction.
Step Six: Sort your business accounting software
Appoint an accountant or set-up your own simple book-keeping system. As a minimum keep records of all sales and costs. We personally recommend getting Quickbooks for your bookkeeping and accounting, though Xero is also excellent. We offer discounted subscriptions for Quickbooks and Xero, these are cheaper than advertised on their website. So even if you don’t use us as your accountants please email us and we can send you the price list.
Step Seven: Register with HMRC for self assessment
Get the right starter pack for you. You can do this all online, or by phone, and it will get you started as a sole-trader We’d also recommend completing HMRC’s free online training which will give you straightforward practical advice on record-keeping, filling in and filing your tax return – and what to do if you take someone on.
Step Eight: Sort out the legal structure
Sort out your legal structure, sometimes it is not better to set up as a sole trader. Sole traders are legally liable for all the businesses debts. Limited Companies are legally separate, you would still own the business but only as a shareholder. It is harder to get money out of the business legally, but most of the time people use loans, dividends and salary to extract cash. The key thing is that a limited company is exactly that, it limits your liability to your business debt. You will also benefit from a lower tax rate however, you will probably need an accountant to help you with this.
