How to get started with your new business
So you’ve decided to start a small business and you’re ready to go, but how do you start marketing your new business?
Here are some things to consider to get your new business idea off the ground.
Sole Trader or Limited Partnership?
The first thing to consider is whether you are going to operate as a sole trader or a limited partnership. The type of small business you are starting will largely determine the option you choose.
A sole trader is a business that is owned by one person (without staff) who is solely responsible for the business’s debts and the enforcement of contracts. This type of business tends to be favored by traditional skilled tradesmen like landscapers, plumbers, decorators, plasterers, etc.
The advantages of being a sole trader are:
Have full control over the business.
It’s easy to set up as there are fewer regulations to comply with. You’ll just need to make sure to contact Inland Revenue to let them know you’re self-employed within 3 months of starting business.
You won’t have to fill out a lot of forms unlike limited partnerships, but you will still need to have the accounts prepared ready for your annual self-assessment tax return to report annual earnings and tax liabilities.
Since there is no staff, you will keep all the profits yourself, which can remain private since you will not have to declare them to the company house.
You won’t have to register the company and can therefore be known as anything, which is why so many sole traders refer to themselves as “trade as…”
You can build a more personal relationship with the customer.
It will be cheaper for you as the accountants will charge you less as they only need to fill out a profit and loss account for you.
The main disadvantages of this type of company are:
You will be solely responsible for any failure or liability, such as your business failure or property damage.
It can be more difficult to compete with larger companies that have more staff and are therefore able to complete work faster.
If you get sick you will have no income. Although you can take out critical illness insurance, some will not pay until after 1 month.
If your business fails, you may be forced to sell your personal assets, such as your home, to meet your obligations.
However, as your business becomes more successful, you can minimize the risks by forming a corporation or limited liability company.
limited liability company
Unlike being a sole trader, when you form a private limited partnership, you are registered in a way that ensures you have limited liability, and your business and personal finances are kept separate. A limited liability company is owned by shareholders and operated by directors. When registering your company as a limited company, you will need to consider the following:
You will be subject to corporation tax.
If you expect to make £77,000 or more per year, you need to register for VAT.
As a director, you will have more legal, financial, and administrative responsibilities.
You will have less control over the overall running of your business, as you will be accountable to shareholders.
You will need to register with Companies House and submit an annual statement to them along with the annual accounts each year.
Note: The difference between a limited liability company and a limited liability company is that in a limited liability company all the shares of the company are in private hands while in a limited liability company the shares are owned by the public.
The main advantage of registering a company as a limited company is that the directors and shareholders only have “limited liability” and therefore their personal assets cannot be touched, unlike being a sole trader.
staffing
When you start a small business, you are actually becoming self-employed and therefore you will need to inform the IRS that your income may change. Even if he keeps an existing job, he must report it to the Treasury.
The same applies if you are going to hire staff. You have the obligation to collect and pay your PAYE installments to the Treasury. The Treasury will provide you with your new business with a PAYE number and a reference number from the account office.
You can do it yourself or you can appoint an accountant to handle all of this and pay wages and salaries on your behalf, which is what I do with one of my largest companies.
Choosing a small business name
Creating a good name for your business is important. When choosing a name for a business, it is important to ensure that the name is not already in use, otherwise you could be sued.
You can check with Companies House if the name you have chosen is available or if you are considering an online business or have a website for your business, you can go online using sites like Go Daddy to check if the domain name you want is available. .
Personally, I used to think that when naming a business, you should make sure the name reflects what your business is all about, but many people argue that the name should be something that is easy to remember or unusual and leaves a lasting impression like ” confused.com” or “funkypigeon.com”. After all, who would have imagined that these types of names would become multi-million dollar companies?
If you plan to start a limited partnership, you will need to register a company name with Companies House. They, in turn, will give you a company registration number that will be unique to your new company.
Companies House will retain your new business details, including address and account details, for third parties to see.
small business insurance
No matter what small business you start, you’ll need to purchase small business insurance to protect your business and your customers. There are many specialist insurance brokers who can put together a package to suit your company’s requirements.
Make sure you have your insurance coverage already set up before you start your small business to ensure your equipment and facilities are insured while you set up your business.
Once you have implemented the above points, you are ready to go live with your new business.