Starting your own business is an exciting venture filled with opportunities – but navigating the initial stages can be daunting. We hate seeing business owners struggle by themselves, so we put together some of our top tips so we can help. Let’s get straight to it.
Registering your business
Officially creating your business is the first step. In the UK, there are various structures that you can choose, each coming with its own legal and tax implications. The main structures are:
- Sole trader: Simple to set up, but you are personally liable for debts.
- Partnership: Shared responsibility and profits, but again, partners are personally liable for debts,
- Limited company: Separates personal finances from business finances, but involves more administrative work and regulatory requirements.
The process of setting up a business is different for each business structure. We won’t go into detail here (we would be here all day if we explained the entire process for each), but you can check the government website for more information and step-by-step guides.
Your tax obligations
Keeping up with your tax obligations is critical to running a business. The main tax you need to be aware of are:
- Income tax: If you’re a sole trader or in a partnership, you’ll pay income tax on your business profits via a self-assessment tax return.
- Corporation tax: If you run a limited company, you’ll pay corporation tax on your profits.
- National Insurance contributions (NICs): Both employers and employees must pay NICs.
- Value added tax (VAT): If your turnover exceeds £90,000, you must register for VAT and apply the tax to the goods and services you offer.
Regarding tax, keeping accurate financial records is essential for remaining compliant and on time, and avoiding penalties. You can consider hiring an accountant to manage your tax filing while taking advantage of all your deductions.
Crafting a solid business plan
A well-thought-out business plan is your roadmap to success, and will help you time and again in your journey. Broadly speaking, your plan outlines your business objectives, strategies, market research, and financial projections. A good business plan will include:
- Executive summary: A brief overview of your business idea, goals, and how you plan to achieve them.
- Business description: This describes your goals, target audience, and products or services. Naturally, some parts of the business description may overlap with the executive summary.
- Market analysis: Research on your industry, market size, target audience, and competitors.
- Marketing strategy: This section outlines your plan for promoting and selling your business’s products or services.
- Management and organisation description: Here, you explain your business’s management and organisation strategy. You may want to include a short biography
- Operational plan: This component of a business plan describes how you plan to run the organisation. You could include details like your organisational structure, the number of employees, and how communication will work.
- Financial projections: These should explain how you intend to bring in revenue and how much is forecasted. This is a complex task, so consider asking an accountant for help.
Securing funds
For obvious reasons, securing adequate funding is a vital step for a new business. Fortunately, there are several funding options available:
- Personal savings: Starting out with what you personally have available to you. Only invest what you’re able to lose.
- Bank loans: Traditional loans can provide significant capital but require a solid business plan and credit history.
- Grants: Look for government grants or local schemes aimed at supporting startups.
- Angel investors and venture capital: Investors can provide capital in exchange for equity in your business.
- Crowdfunding: Platforms like Kickstarter or Indiegogo allow you to raise funds from many people.
Which option you choose will depend on your business. For example, private investors usually look for an ambitious project with the potential for high returns, while crowdfunding might work best for you if you have a really exciting product or service.
Maintaining accurate financial records
Good financial management is key to the success of your business. Keeping accurate and up-to-date financial records helps you monitor your cashflow, track expenses, and prepare for your taxes. But what can you do to better maintain your records?
- Separate personal and business finances: Always open a dedicated business bank account to avoid confusion and ensure clear financial records.
- Use accounting software: Thanks to automation, tools like QuickBooks or Xero simplify record-keeping and financial reporting. This will save you a lot of time while drastically reducing the chance of human error.
- Speak with an accountant: An accountant can help by taking on your financial management entirely. Again, this will save you time and reduce the chance of error, as accountants are experts in record-keeping.
Talk with us
Starting your own business in the UK is an exciting journey that requires careful planning and execution. By following these tips and seeking professional advice, you can navigate the complexities of entrepreneurship and build a successful and sustainable business.
If you need expert guidance, we’re here to help. Contact us today to learn more about how we can support your business journey.