Recorded Webinar: How to Start a Business
Create a Business Plan
Have you put your business objectives down in writing? Are you able to demonstrate qualified experience in the type of business that you want to launch? How are you going to fund your business? What are your expectations for sales, profitability and investment in assets? Have you consolidated all this information in a formal Business Plan?
Even if you don't want to borrow money, a good business plan will help you to understand your current position and give you a good indication of your future possibilities.
Choose the right Business Structure
Are you going to launch your business as a sole trader, partnership or limited company? Before you choose your business entity the following should be considered:
- commercial risks
- expected profitability
- financing option
- how you will extract your funds
For more detail on how to choose the right structure for your start up click here.
Funding your new business
Your business plan should include a cash flow forecast to enable you to identify your cash and funding needs in the early stages of your business. Consider how much of this you will be able to fund yourself and investigate whether there are any Government schemes to help. There are many start up and fledgling business schemes that you may be able to access. Your local council’s business hub is a good place to start.
Whether it is for funding or your ongoing banking requirements, you should identify your ‘friendly bank manager’. This can be one of the most important contacts for your business and it is crucial that you are well prepared for that critical first meeting.
Fortunately, here at TaxAssist Accountants we already have well established relationships with all the major banks in the UK and can help you prepare for your first and subsequent meetings.
Consider your accounting and reporting needs
All businesses are required to keep records. They can be maintained by hand or may be computerised but should contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you are considering purchasing software to maintain your records, obtain professional advice. There are many software solutions available and we can help match you to the right software solution for your specific needs.
Don’t forget tax
When starting in business, taxation must be considered and the tax payments planned for. Tax and VAT will also dictate what accounting systems you may require.
Taxation on profits
The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.
The rates of National Insurance (NI) contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. In a company, it may be possible to avoid NI by paying dividends rather than salary.
You should decide whether or not it is in your best interest to register for VAT (Value Added Tax) from the time of starting up. Whether you decide to register now or in the future both the profitability and the cashflow of your business will be affected. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register. If you are VAT registered you will also need to consider appropriate software to ensure that you comply with the Making Tax Digital requirements.
One of the main advantages of registering for VAT when you do start your business is you will be able to reclaim VAT on purchases made before you start trading. Don't worry though, if you find it is best to register at a later point in time HMRC have made it possible for traders to reclaim VAT prior to their registration provided the claim is made within certain time limits. For further guidance on VAT registration please click here.
We have a start up advice hub here which is designed to help you get your new venture off to the right start and avoid any potential pitfalls.
How we can help
At TaxAssist Accountants, We can help you from day one by looking at your cash flow position, which is one of the most important factors for any new business, by helping you to find the best bookkeeping system for your business and by discussing your options for the best tax savings available. We offer a free, no obligation consultation and would be happy to discuss the next steps for your start-up. Call us today on 0800 0523 555 or enquire online.
Date published 7 Sep 2020 | Last updated 7 Oct 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.