Start Up Questions Answered
What do I need to do to set up a business ?
Firstly, you need to decide on a Legal Entity. All this means is do you want to operate as a Sole Trader, a Partnership, or do you need to be a Limited Company. The first two are the quickest, simplest and easiest to set up, but you are solely responsible for the debts of the business. You operate as a Self Employed person, with the profits of the business equating to your earnings.
As a Limited Company, the debts are limited by guarantee, but in this case you are an employee of the Company, and pay Income Tax and National Insurance through the PAYE scheme. The setting up takes a little longer as you need to register with Companies House, who then issue you with a Company Registration number to display on Company paperwork.
Must I have an Accountant ?
Again, if you are a Sole Trader, or if your accounts are relatively simple, you may find that you are capable of maintaining the necessary records, and completing the Self Assessment Tax forms without having to pay an Accountant. If the accounts, or your overall financial situation appear more complicated, it may be more cost effective to employ a professional. Remember, a good Accountant should also save you some Tax!
What records do I need to keep ?
As an absolute minimum, you should retain all receipts for purchases, all sales receipts or invoices, and record all mileage relating to business use. It would also be a good idea to keep all telephone bills and, if you are operating an office from home, all bills for heat, light, gas, mortgage, etc. to take to your accountant.
How do I set up a new Business
Depending on the type of business you are setting up there are different things to do.
If you are setting up as a Sole Trader then you must ask the Inland Revenue for a booklet called 'Thinking of Working for Yourself?', P/SE/1 - inside this booklet is a green form, CWF1, which you need to complete and send to the Inland Revenue NI Contributions Office, Self Employment Directorate, Longbenton, Newcastle on Tyne, NE98 1ZZ. (the address is printed on the form). This registers you as a self employed person with Inland Revenue. To download a copy of this Leaflet please click below and select save source to disk
If you are setting up as a Partnership it is necessary for each partner to send off a copy of the form. It may also be a wise move to look at a Partnership Agreement, where what you own and what you will have to put into the business is agreed beforehand. Experience suggests that few Partnerships outlast the business itself and disagreements usually occur at some stage. Approach Partnership with caution.
If you are setting up as a Limited Company you need to register your company with Companies House, this can be done by a Solicitor, or an Accountant, or in fact by a Company that specialises in Business Formations. If there are no particular complications then this is often the quickest and least expensive way to do it. To access a really great link that we used to set up fastlinksolutions click here.
If you are a Director of a Limited Company then you pay Tax and National Insurance as an employee of that Limited Company and therefore you need to ask Inland Revenue for a 'New Employers Pack' which gives you tax and NI charts so you can work out how much to deduct from your salary. In some areas Inland Revenue run short training seminars to show you how to calculate and complete the PAYE details. Contact your local Tax Office (see useful contacts)
What can I use as a business name and how do I register it?
If you are a Limited Company you may not use a name that could be considered offensive or illegal, or one that could be considered the same as an existing company. During registration of the Limited Company your Solicitor or Agent should check this out as a matter of routine. When you register the company with Companies House a search is carried out to ensure you do not have the same name as another, existing, company.
For a Sole Trader or Partnership the proposed name may be checked with the BNR (Business Names Register) and they may be contacted on 0121 678 9000 or on their web site at www.bnr.plc.uk/