Working with an experienced accounting firm that provides business start-up and company formation services can be ideal, as it is all too easy to forget something or skip past a step that may prove important later down the line.
Examples include selecting the most suitable trading style, registering your business with Companies House and the tax authorities as appropriate, and implementing a bookkeeping and accounting system to enable you to submit tax returns and financial statements.
Creating a Business Plan
Even if you have a fully formed vision of your business branding, market niche and growth trajectory, a comprehensive business plan is useful and necessary if you expect to apply for any financing support.
Business plans cover various elements, including:
- Objectives: what product or service will you offer, and to what customer demographics?
- Marketing: do you have a niche, and how will you compete with established competitors?
- USP: what makes you stand out? What is unique about your business idea?
- Mission: what are you hoping to accomplish, in what timeframe, and how?
Focusing on these underlying aspects can help to identify the right name for your business and develop cohesive branding that ties into your expectations and aspirations.
Incorporating a Business or Choosing a Trading Style
The next step is to decide how you plan to trade. You might be a sole trader, a partnership, a limited company, a contractor, a freelancer – there are multiple options, and a lot depends on your business ownership structure.
Understanding the requirements and tax implications of the trading style you choose is important.
For example, a limited company may be beneficial in terms of tax exposure, but you must comply with mandatory requirements such as filing annual accounts, registering for corporation tax and submitting yearly confirmation statements.
- Sole traders are self-employed individuals and often tradespeople, independent professionals or service providers.
- Partnerships can be limited, with the ownership split between shareholders, with a formal partnership agreement to establish liability and seed financing contributions.
- Limited companies have a degree of legal separation from their owners and are registered with Companies House on a publicly available register.
This list is not exhaustive, and multiple other structures may apply. One example is a Special Purpose Vehicle (SPV) – a type of limited company suitable when the business operates within the property sector, such as a landlord renting out portfolio properties.
Registering for the Relevant Taxes
Once you have decided what your business will do, what it will be called, and how it will function, you will need to register with the tax authorities. Again, this task varies depending on the decisions you have made thus far and could include the following:
- VAT – if you wish to register voluntarily or anticipate revenue above the threshold.
- Corporation tax – if you are an incorporated company.
- Self-assessment income tax – if you are a sole trader, partner or self-employed director.
- CIS – the Construction Industry Scheme that manages deductions from subcontractor payments.
- PAYE – if you plan to employ staff members.
Most tax schemes have specific thresholds, deadlines or enrolment dates. For example, if you expect to be a limited company, you must register within three months to comply with legal requirements.
New companies that plan to hire staff will need to consider other provisions, such as an auto-enrolment pension scheme.
Setting Up Business Banking
Every business should have a separate bank account. Even if you are self-employed, the best practice is to have an assigned account dedicated to business transactions.
This makes it much easier to monitor and assess your income and outgoings and compile reports, tax returns and other declarations.
Banks cannot open an account for a limited company without a copy of the registration certificate and company registration number. They may ask for other evidence of the trading name and appropriate registrations before opening an account for another type of business.
Bookkeeping and Accountancy
Record keeping should never be left as an afterthought, and if you do not have a bookkeeping system or software in place, it could lead to a huge amount of admin work as you catch up with potentially weeks or months of transactions.
Chichester and Fareham accountants, James Todd & Co recommends cloud-based accounting software with multiple advantages:
- Automatic bank feeds upload transactions daily, making it easier and faster to reconcile income and expenses, check off paid bills, and ensure your customers are up to date.
- Remote access means you can log into your bookkeeping system from any device and location – an essential feature if you work on-site or move around different places while running your business.
- Making Tax Digital: MTD is an initiative whereby HMRC is introducing new digital filing requirements to different parts of the tax system. Advanced bookkeeping software will be compatible, so you can submit returns or accounts directly.
Cloud-based software is ideal if you intend to work with an accountant since you can grant dashboard access to allow them to extract data used to prepare management accounts, cash flow projections and other important reports.
Ensuring Legal and Regulatory Compliance
Finally, before you begin trading, or announce your business's launch, verify whether additional registrations apply to your sector or business focus.
UK businesses may need to be registered with a specific body or regulator, such as the Environment Agency, Financial Conduct Authority or Care Quality Commission.
Working through these steps methodically and taking the time to establish your business on a firm foundation will avoid any last-minute surprises and ensure that when you are ready to open your doors, you will be prepared to proceed with the systems, registrations and compliance necessary for success.
Read more about James Todd & Co - James Todd & Co Expand With New Chartered Accountants Office in Fareham
About James Todd & Co
James Todd & Co have been providing accounting services for more than 30 years across Chichester, Farnham, Lavant, and Sussex and Hampshire businesses. Their clients trust them to provide bookkeeping, financial auditing and compliance, management accounting and financial advisory services.
Source Company: https://www.jamestoddandco.co.uk/
