Starting your own business? Or perhaps re-assessing your existing business? Here are a few tips and some practical advice to help you start up and run a successful business.
Each year in the UK, more than 500,000 people start a business of their own. Some survive, many don't but starting a business can provide you with a more rewarding life, but requires careful planning in order to succeed.
There are many reasons why you want your own business, it may be a great idea that no-one else has thought of but for most it’s the chance to earn more money or to be your own boss. You may want a better work-life balance with greater flexibility or perhaps you have the impetus of having lost your job.
Whatever the reason you'll need a good business plan. You'll also need a brand, a name and competitor knowledge. You'll need to understand your costs before you get going, and be able to manage your finances once you've started your business.
When you're starting your business, take care of the key start-up tasks properly, and in the right sequence, and you’ll increase your chances of success and get off to a great start.
1. Should I trade as a sole trader, a partnership or a limited company?
There are pros and cons, as you would expect, to each – so it’s really a case of discussing these and your personal circumstances and finding the solution that is best for you.
2. Should I be VAT registered?
At present the VAT threshold is £82,000. This means if your turnover (i.e. sales or income) reaches that figure then you have to register but there are circumstances when you could benefit from a voluntary registration. Your accountant will help you decide when you need to register or if it’s beneficial for you to register voluntarily for VAT.
3. What records do I need to keep?
You need to know which records you have to keep and more importantly which expenses are tax deductible. And, if you’re starting a business there are some expenses, incurred whilst the business is being set up, that can also be deductible. Discussing this with your accountant can save you time and money and as someone once said the easiest way to increase your profits is to pay less tax.
4. When do I have to get my various returns to HMRC?
It depends on which route you choose – sole trader, partnership or limited company – and whether you’re registered for VAT because the forms and returns and the due dates vary considerably. This is, of course, something your accountant will do for you and make sure you have no problems with HMRC
5. How can an accountant help me?
There is an old joke ‘how many kinds of accountant are there?’ Answer – ‘three, those who can count and those who can’t.’ Well in fact there are two kinds, those whom you see once a year and who produce a set of accounts and those who offer a more comprehensive package, a port-of-call for whenever you have a query or want some help or advice on something, and who makes sure that whatever forms or returns you need are produced accurately and on time and who can give you on-going assistance to make sure you pay only as much in taxation as is necessary.
The first thing you need to consider when going through your list of potential accountants is whether or not any of them have some degree of familiarity with your business sector. Also, look at the size of the firm. A small to medium-sized business accountant will specialise more in the kind of accounts issues common to smaller firms. They are also likely to charge less than a larger firm and give more direct access to more experienced partner. Make arrangements to visit several firms in person to meet the people you will be working with and to make comparisons. A lot comes down to personal chemistry, and your accountant needs to be able to get into your business and show an interest in it as well as just doing your accounts if they are to advise you properly on the business. Equally a good accountant should want to make an appointment to come and see your business as a good understanding of the business is essential. You’re likely to be working closely with your accountant and if you don’t get on at a basic level, your professional relationship may be more difficult than it needs to be.
Ask if you can speak to other clients. This is like asking for references and will be a real test of the calibre of the firm. If they are confident that their service has impressed, they shouldn’t have a problem referring you to a few people.