So you’re starting a new business…What do you need to do? In this blog post we’ll take you through some of the steps and decisions you need to make.
Being a sole trader is a great way to start if you are a one man band. It is the simplest form of a business and your accountancy requirements aren’t too burdensome.
Most sole traders just need to let HMRC know they have started self employment, keep hold of their business receipts, invoices and bank statements then record everything on their self assessment tax return each year to submit by 31 January.
A partnership is very similar to a sole trade, and can be a good choice when two or more people choose to start a business together.
A Limited Company is a separate legal entity to its owners and can offer you more protection as you have the reassurance of limited liability. This means that generally speaking you won’t be held personally liable for company losses. There are also tax advantages to be a Limited Company, however everybody’s circumstances are different, so you should always take advice from an accountant before setting up a Limited Company.
The downside to a Limited Company is the extra administrative and accounting responsibilities. As well as preparing accounts to send to Companies House, you will also need to send a Confirmation Statement each year and complete a corporation tax return for HM Revenue and Customs. Each director of the company will also need to complete a self assessment tax return.
There are other business structures which could be suitable for you such as an LLP (Limited Liability Partnership) or a PLC (Public Limited Company). Always take advice from an accountant if you are not sure what to do.
If your business is going to employ people then you have a number of responsibilities. You must make sure you are paying at least National Minimum Wage. You also need to provide your employees with a contract within two months of them starting work.
Every time you pay an employee you have to give them a payslip, make a submission to HM Revenue and Customs and pay any tax due. An accountant can help with this. You may also need to provide a pension to your employees.
If your business has an annual turnover of £85,000 or more you will need to register for VAT and charge it on your sales. VAT can be complicated because there are different rates depending on what you are selling and different VAT schemes which could save your business money. Talk to an accountant if you think your turnover could be as high as £85,000.
It is important to think about how you will do the bookkeeping for your business. You may be able to do it yourself if your circumstances are simple, but it may be easier to ask an accountant for help. There are lots of different software packages available and your accountant may be able to get you a discounted rate on a software subscription.
Once you have sorted out the legal structure and accounting for your business, there are other things to consider…
Do you want to apply for a business loan? You may want to ask an accountant or business advisor for help writing a business plan.
Think about the different insurances you might need. Employers liability insurance? Public liability insurance? Professional indemnity insurance? Will your current car insurance cover you for business travel?
If you handle any private information in your business you may need to register with The Information Commissioner’s Office and pay a fee.
Your accounting will be much easier if you set up a business bank account. Most banks offer good deals to start ups, so have a look around before you sign up for an account.
For help with monitoring the cash flow or budgeting, ask an accountant for help.
At JMC Accountancy Ltd your initial consultation is always free and there is no obligation to sign up for any services.
Get your business off to the best start by contacting us today.