An additional 1.5 million people in the UK went self-employed between 2007 and 2017, and the number of entrepreneurs starting their own small businesses is still growing. Micro businesses and small to medium enterprises (SMEs) now make up a staggering 99% of private companies in the UK.
Starting a new small business can be daunting. There are a huge number of aspects that need to be considered and researched, and once you make specific business and financial decisions, there is a significant amount of information and documentation needed to officially create a new business too.
Wondering how to start a small business in the UK? Here are eight steps to help you successfully start a small business.
You’ll likely feel like you have an endless amount of details that need to be ironed out when starting a small business. Begin by putting together a business plan to get the ball rolling. It’s a great exercise for creating clear objectives, mapping your vision, developing ideas and planning for the future.
Within the business plan, define your unique selling point and identify and analyse your target market. Your business plan should be short, relevant and include the following key elements:
Customers And Market
Sales And Marketing
Finances, Goals And Projections
Team And Expansion Plans
Do a UK trade mark search on your preferred business name and logo. Search Google and Companies House to see if the business name you are wanting to use is available. You wouldn’t want to invest into marketing a brand if you won’t be able to protect it. And more importantly, you risk being sued for trade mark infringement.
Once you’ve decided on your business name, pick an appropriate domain name and register it. Think about trademarking your business name and other parts of your brand as well. To apply to register a trade mark, visit the Gov.UK site and carefully look over the guide to new applications as you aren’t able to change your trade mark once you’ve applied.
Are you going to be a sole trader or have a limited company, partnership, or limited liability partnership? It’s important to take the time to look into the pros and cons of each business structure and find what’s the best option for you.
Here is a summary of the four main business structures:
A sole trader is the exclusive owner of a business and is entitled to keep all of the profits but also liable for all of the losses.
A limited company is a private company where the owners are legally responsible for its debts but only to the extent of the amount they invested into it.
A partnership is between two or more individuals who share profits and management.
A limited liability partnership (LLP) is where some or all of the partners have limited liabilities and has elements of partnerships and corporations.
HMRC claims most businesses apply as a sole trader, partnership or limited company. The decision to incorporate depends on a number of factors, including turnover, profitability and whether your customers are consumers or businesses. Once you decide on a business structure, you then need to register your business.
Read more: Dividends or salary?
Read more: Making the most of small business tax relief
An accountant can make sure your business structure and accounting systems are set up to ensure you only pay the tax you legally owe and no more. Find out more about how we can help you start a small business on 0207 043 4000 or firstname.lastname@example.org.
If you’re a company director, self-employed or a member of a partnership, you’ll need to register for Self Assessment to pay your own taxes on any income you earn. Budget for how much you’re estimated to owe in taxes and National Insurance contributions. Once a tax year ends, you’ll have nine months to prepare and pay the tax bill.
If you’re setting up a limited liability partnership or a private limited company, you’ll need to pay corporation tax on your profits. Also, if you’re employing staff you’ll likely have to register for PAYE and VAT.
Even if it starts as a simple spreadsheet, setting up a billing system is an integral part of your business. It’s important to note that for the 2020/21 financial year, small businesses will be required to invest in digital bookkeeping as part of HMRC’s business initiative of Making Tax Digital. Certain records will need to be digitalised, so you’ll likely have to invest in some kind of basic small business accounting software or page in order to comply.
It’s also recommended to create a business bank account to keep your personal and business finances separate. You might also want to consider opening a credit card and PayPal account.
Many small businesses need finance when first starting. Assess your finances and decide if you need external investment or a small business loan. As cash flow is the most common issue among small businesses, there has been a rise in innovative SME lending businesses and services, which are opening up more lending opportunities for small businesses and making lending simpler and quicker. Esme Loans and iwoca are two of the leading FinTechs for SME lending which you can read about here.
Accountants can provide helpful advice on tax planning, compliance and offsetting expenses and can be especially beneficial when starting a business. With the rise of innovative accounting businesses, you can even find small business accountants who are also alternative legal service providers, offering accountancy services and legal services all under one roof.
At Accounts & Legal, we have a differentiated position of “Making Accounting Useful”. Get in touch with our friendly team today on 0207 043 4000 if you are interested in our small business accounting services.
Legal issues are one of the top reasons small businesses fail. There’s a significant amount of documentation needed to start and run a company, so it’s important to be on top of the legal aspects of starting a small business.
Avoid common legal mistakes, involving contracts, intellectual property and employment documentation, when setting up your company. Check the Government’s website to determine what your business responsibilities are as this depends on what your business does, where you work and whether you take on people to help the business.
If you need help starting a small business, we provide comprehensive company registration services and company formation to help you set up a completely new company, guide you through the process and liaise with the appropriate authorities on your behalf.
At Accounts & Legal, we can get your company running smoothly and successfully from the beginning. We take care of all of the legal and accounting needs of small businesses, ensuring legal and tax compliance for small businesses.
Give us a call on 0207 043 4000 for more information on our small business accounting and legal services, or try our instant accountant quote tool.