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Starting a Business

anne-marie-naylor_1.jpgby Anne-Marie Naylor

It is the ambition of many people to run their own business. Some may have been made redundant and find themselves with free time and financial resources. Others make the decision to start up in business to be more independent and obtain the full financial reward for their efforts.

Whatever the reason, a number of dangers exist. Probably the greatest concern is the possibility of business failure.


Initial Considerations

In order to make your business a success there are a number of key factors which should be considered:
  • commitment - starting a business is demanding. Determination and enthusiasm are essential
  • skills - you will need managerial, financial, technical and marketing skills. If you do not have these skills personally, they can be found in a partner or employee, or acquired through training
  • your product or service should have a proven or tested market, but must not conflict with the patent or rights of an existing business.
 
In addition to these general considerations there are a number of more specific matters.

The business plan
The business plan is the key to success. If you need finance, no bank manager will lend money without a sensible plan.
Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results.

Business structure
Click here for more information 

Books and records
All businesses need to keep records. They can be maintained by hand or may be computerised but should contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you are considering purchasing a computer to maintain your records, obtain professional advice.

Accounts
The books and records are used to produce the accounts. If the records are well kept, it will be easier to put together the accounts. Accounts must be prepared for HMRC and if a company is formed there are strict legal requirements as to their format.

A company and a LLP (Limited Liability Partnership) may need to have an audit and will need to make the accounts public by filing them at Companies House within a strict time limit.

Taxation
When starting in business, taxation aspects must be considered.
  • Taxation on profits
    The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.
  • National insurance (NI)
    The rates of NI contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. But in a company, it may be possible to avoid NI by paying dividends rather than salary.
  • Value added tax (VAT)
    Correctly accounting for VAT is an essential part of any business and neglect may result in a significant loss.

    When starting a business you should consider the need to register for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register.

    Expect a visit from HMRC (HM Revenue & Customs) within eighteen months of registration. This inspection of your records ensures VAT is being properly accounted for.
Information provided by Harts LLP
Whilst some generalisation can be made about starting up a business, it is always necessary to tailor the strategy to fit your situation. Any plan must take account of your circumstances and aspirations.  Whilst business success can never be guaranteed, professional advice can help to avoid some of the problems which befall new businesses. They would welcome the opportunity to assist you in formulating a strategy suitable for your own requirements.   Harts LLP based in Macclesfield, Cheshire are offering a FREE half and hour’s initial consultation at their office – for more details contact Kay Stevenson on 01625 669669.  www.hartsllp.com

For information of users: This material provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
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