One of the great things about setting up a new business in the UK is that there is so much support to help you get on your way. There’s plenty of advice, case studies and government websites designed to take you through everything you need to do. In the early stages, your business will become your life, but the key elements of setting it up can pretty much be done in a day.
Decide on your legal structure
Are you setting up as a sole trader or limited company?
Starting a business as a sole trader is the easiest to set up. Inform HMRC either by phone or online that you are a sole trader. They offer free online training to help you with your record keeping and tax returns. As a sole trader, you own all profits after tax, but you are also responsible for all business debts. It’s a simple model of operation but you will have limited opportunities to raise money and you will lack the credibility of a registered company. You will need to pay your tax by the 31st January deadline, keep up NI contributions and register for VAT if your taxable turnover is more than £85K in any twelve- month period.
A limited company is a separate legal entity, you can’t simply take money from the company, it must be paid as salaries, dividends or loans. All the accounts must be filed annually with Companies House and your company name, registered address and place of registration must be on your website.
You’ll need to choose a business name which isn’t being used and buy the website domain name.
Whilst Employer’s Liability Insurance is the only business insurance required legally, you should consider other insurances too. Public Liability Insurance gives you protection if your business activities harm or injure a member of the public or damage property. You should seriously consider this insurance cover no matter what size your business. Other forms of insurance you might consider are Business Interruption Insurance, Cyber Insurance and Key Person Insurance.
Set up a Business Bank Account
There is no legal requirement for you to do this, but you would be foolish not to do so. Your accounts need to be entirely accurate and you should use an accountant or an online accounting package.
Comply with government regulations
This is not as daunting as it sounds. The government website will take you through all that you need to do to comply with Health and Safety, Licencing and Data Protection.
You will either need to acquire rented business premises or you may choose to start your business from home. If you are meeting business visitors in your home, you should check with your local council as to whether this requires planning permission.