During the COVID-19 pandemic, have you found yourself furloughed or even out of work? Well one thing is for sure, you are not on your own and one positive to take from this awful situation is that you may find that you have a little bit more spare time on your hands. Maybe that’s been a great opportunity to spend some much needed time with the family or could this time be used to start that dream business you may have been putting off for the last 10 years?
Starting a small business is easy using our step-by-step guide. The seven steps below will advise you on how to start a business, taking you through each of the key stages of the start-up process. From evaluating your business idea and choosing a company name, through to designing your business cards, developing a website, and finally, getting ready to launch.
Create a business plan
Anyone can come up with a great idea. But turning that great idea into a successful business is a different challenge all together.
Before you start speaking to a solicitor or accountant, renting out a shiny new office space, or forming a limited company, you need to put your thoughts on paper. This will help you stay organized and focused.
A typical business plan consists of the following sections:
- Executive summary – an overview of your new business and your future plans
- Opportunity/market research – What are you actually selling and how are you solving a problem (or ‘need’) for your target audience? Who is your competition? Do you differentiate?
- Execution – This section will cover your marketing and sales plan, operations, and your milestones and metrics for success, think short and long term
- Management and operational structure – Describe your current team and who you may need to hire
- Financials & Projections- Start with a sales forecast, cashflow statement, a profit and loss and your balance sheet
Bring your brand to life with a name and a logo
Your company’s name and logo could greatly shape how the public perceives your start-up.
The name of your start-up should align as closely as possible with your business strategy. Before you commit to a name, consider your industry, as well as how this potential name will help you grow your company.
Make sure you do a UK trademark search on the Gov.uk site to make sure you do not invest into marketing a brand if you won’t be able to protect it. And more importantly, you risk being sued for trademark infringement.
Decide on the business structure
Do you want to be a sole trader, partnership, LLP or limited company?
It’s important to take the time to look into the advantages and disadvantages of each business structure and find what the best option for you is.
A sole trader is the only owner of a business and is entitled to keep all of the profits but is also liable for all of the losses made.
A limited company is a private company and a separate legal entity to its shareholders and directors which means that personal assets are not at risk as the risk is limited to their investment.
A partnership is between two or more individuals who share profits and management. Similar to a sole trader, each partner would reap the benefits and rewards of the business but also be responsible for liabilities and losses.
A limited liability partnership (LLP) is where some or all of the partners have limited liabilities and has elements of partnerships and corporations.
The decision to incorporate depends on a number of factors, including turnover, profitability and whether you are selling to the public or other businesses.
Register with HMRC for Self-Assessment or VAT
If you think trading as a LLP or a limited company is the best route for your business, you will need to pay corporation tax on your profits.
Also, if you need to employ staff, it is very likely you’ll have to register for PAYE and potentially even VAT. Alternatively if you decide to go self-employed or trade as a partnership, you’ll need to register for Self-Assessment to pay your own taxes on any income you earn. Try and budget for taxes and National Insurance contributions you may owe at the end of the tax year.
A major goal when starting a new business is to make some money. And you won’t know if that’s happening unless you have a reliable picture of income versus costs.
Good record-keeping will:
- Tell you if you’re profitable, or at least moving in that direction
- Tell you if you’re likely to run out of money (even profitable businesses sometimes do)
- Make tax season far easier because you’ll have all the information required to lodge your tax returns.
This record-keeping is commonly referred to as bookkeeping. It’s critical to small business accounting, and there’s a real science to it. I would personally recommend Xero, a cloud based software built for business owners not accountants.
Choose an accountant
It is easy to look at an accountant as an extra cost, and you may even look to do the bookkeeping yourself. While the approach sounds logical, there are a lot of good reasons why smart entrepreneurs do carefully choose accountants and incorporate accountancy into their company right from the start.
A good accountant is more than just a number cruncher and a tax filer, they are fully qualified professionals who can effectively act as a virtual FD and an extension to your business. They will be able to help with all of the previous steps, and take some of the stress away.
Get to grips with legal issues
And last but definitely not least, you need to make sure you know the legal aspects which surround running a business. Avoid the potential legal threats, involving contracts, intellectual property and employment documentation when setting up your company. It may be worth reaching out to an external HR team or seek further legal advice.
For more information please get in touch with your usual UHY adviser or Max Whiteley on firstname.lastname@example.org or 0161 236 6936.