How to Start up a business is a huge question, but sometimes wish we would hear it more often at the right time.
The problem is we don’t hear this, and a new client can approach 12-15 months after starting their company and then looking for help.
Businesses are very much like buildings. No-one who was hoping to build a block of flats, or a three story house would ever consider doing so without ensuring there are strong foundations and full planning in place. However, it’s very common in business that people do exactly that, and find that they have issues, not just with their accounting, but other aspects of their business because it wasn’t set up correctly. I’d say you have a few things in place as a minimum.
- Choose your entity – Sole Trader / Limited Company
- Research Insurance required
- Have a business plan – it doesn’t necessarily need to be detailed, but you need some kind of loose plan as a minimum
- Make sure you have a business bank account (doesn’t matter whether you are a sole trader / Limited Company – with MTD ITSA on the horizon, a business account will save you money in the long run)
- Get a bookkeeping system – Xero is a fantastic system to look at as a starting point, and learn how to use it – this can be done in as little as a day. However, if you don’t use this / use it incorrectly, it can be an expensive mistake
- Find a trusted advisor – whether this is an accountant, a business coach, a mentor, or even a friend who has done this before – there will be bumps in the road, so having someone who has been there before will be invaluable.
- Have a route to get money out of the business – we have seen individuals who have no PAYE scheme or shares and don’t understand they can’t strictly get money out from the company
- Make sure you stay on the right side of Official Bodies – HMRC, Companies House, Pensions Regulator, Council, Trading Standards – all of these people have the power to either shut down your business or make it incredibly difficult to continue – best to stay on their good side!
- Understand VAT Rules if this is relevant to your business
- Have a plan if the business is 10 x more and less successful than you planned. If your business model only works in a certain sweet spot, it is probably not going to work. Whilst no-one wants to think about their business failing, refusal to look at this possibility is naïve. You want to be sure if the worst happens, you are not going to lose your house or damage your future. On the reverse, if the business is considerably more successful, do you have planning scenarios to draw the money in a tax efficient way?
These are just 10 basic things to consider. There are numerous others, but if you follow number 6 on the list, you will have someone there to help you with the other steps.
If you are thinking of starting your own business, and want people who can help and be on your side, give us a call today on 01473 874844