When it comes to New Year’s resolutions, there’s one that often tops many would-be entrepreneurs’ lists; to start their own business.
And while many resolutions will go unfulfilled, this is one that really is achievable, according to James Pressley, Head of Corporate and Commercial at Kirwans law firm.
“People often think that the idea of starting up their own business is little more than a pipe dream,” James says, “but it’s actually more realistic than you might think.
“At a time when many bigger companies are looking to restructure and cut costs, there are opportunities for smaller, more flexible start-ups which can adapt quickly to market conditions to launch and prosper.”
With a record high of more than 660,000 new companies registering last year, it seems that many entrepreneurs feel the same way.
So, if you’re thinking of going it alone in 2020, read on for James’ advice on how to start your own business like a pro.
1) Decide on your business structure
Consider whether you’re going to register as a sole trader, a partnership or a limited company. Limited companies mean you cannot be sued personally, but there is more paperwork and you’ll need to make filings at Companies House. Acting as a sole trader is much more straightforward, but your personal wealth will not be protected should legal action be taken against you. Whichever structure you decide, make sure you let HMRC know that you’re becoming self-employed. Many businesses fear the tax man, but HMRC offer numerous helpful online training seminars https://www.gov.uk/guidance/help-and-support-if-youre-self-employed to help businesses navigate their way through the tax system.
2) Speak to an accountant
Whatever business structure you choose, you should seek advice from an accountant https://www.icaew.com/. Not only will they be able to talk you through the various business structures and help find the best one for you, they’ll also advise on whether you should register for VAT. An accountant will also be able to help you with payroll, your tax affairs and general business advice.
3) Draw up a business plan
A business plan provides a written description of your company’s future, and it’s fair to say that you won’t get very far without it. It sets out your business strategy and how you’re going to get there and may also be used to convince funders to invest in the firm. Just writing your business plan will make you think practically about important things like who your customers are going to be. Look online for some good templates to help you get started. https://www.gov.uk/write-business-plan
4) Set up a business bank account
One of your first tasks as a business owner should be to set up a business bank account. A business account is so much more than just a place to keep business costs separate from personal ones; it will help your business develop its own credit profile and will be a valuable record of your business income and expenditure. Compare a number of business bank accounts to find one with bank charges suitable for your business.
5) Record everything you spend
Business-related spending will form the basis of your tax return, so if you fail to record it, you could be missing out on tax deductions. Record the date and reason for every expense, and keep all receipts. They will all add up to reduce your overall tax bill at the end of the year. There are a number of apps you can use to do this digitally which your accountant will be able to recommend.
6) Consider a partnership or shareholders agreement
If you are setting up a business with someone else, you should consider a Partnership Agreement or Shareholders Agreement to protect your legal relationship with each other. It may seem too formal at the outset, but a few years down the line you will undoubtedly be glad you did.
7) Instruct a solicitor
Ask a solicitor to draw up a set of terms of conditions for your business, which protects your business, sets out your procedures, formalises what you have agreed to do and limits your liability. It will also include your payment terms; a vital element, as it tells the customer when you expect payment to be made and gives you a better chance of getting paid.
8) Consider whether you need insurance
Like house insurance, business insurance is a necessary evil; you might never need it, but it’s absolutely essential that you have it. Check which types of insurance you might need - public liability and professional indemnity are common – and make sure you have the ones relevant to your business.
9) Check that no-one else already owns your business
Well, not your business exactly, but certainly the name, otherwise a whole lot of time and money could be spent setting up domain names and websites and having logos designed, only for you to discover that someone else already has the same business name.
10) Choose your location carefully
If your business involves finding premises of some description, such as a retail unit or office space, then take your time to make sure it’s absolutely right for you.
For example, if your business is a shop, then it’s a good idea to make sure it’s located in an area with as much footfall as possible. If it’s a professional services business, then a location within the financial district would be ideal. Consider who you want your customers to be and where you need to be located in order for them to easily find you. Also think about how much space you’ll need, and whether there’ll be room to expand.
11) Don’t sign a premises lease until it’s been approved by a solicitor
Taking on a premises lease is a big commitment, and one that, in the early days at least, is likely to form a large chunk of your outgoings. It’s vital that a solicitor checks over it in case it includes obligations and liabilities you don’t know about.
12) Consider how you’re going to market your business
Marketing is an important element of your business, as it’s a way of letting potential customers know that you’re out there. In the early days, when cash is tight, social media can be a very useful tool. Then, further down the line, you might wish to seek advice from a marketing or PR professional. Think about how you’re going to let people know that your business exists.
13) Make sure you’re compliant with all regulatory issues
This is an important one, as non-compliance can lead to all kinds of legal problems. Check government websites https://www.gov.uk/browse/business to see if you can find any rules and regulations specific to your industry, for example food safety and hygiene, and make sure that you adhere to them all in order to avoid hefty fines or prosecution further down the line. Ensure you have all the relevant licences in place too.
14) Check out your employer obligations
If you are going to be employing people, you’ll need to ensure that you – and they – understand their employment status and have the right employment contracts in place. It is also important to understand employment law to ensure that you do not behave in a way that could cause employees to make claims against you at a later date. Find some helpful advice to get you started here: https://www.gov.uk/browse/employing-people.
15) And if your business will have a website . . . There are legal requirements for UK websites, like providing clear contact details so your customers can get in touch with you. Be careful not to use images on your site which belong to someone else, or you could be threatened with legal action. Using words people search for on the internet will boost your site’s ranking, so try to find keywords related to your industry. Finally, remember that if you are collecting customer personal information you need to pay an annual fee to the Information Commissioner’s Office.