Business start-up guide
The guide below is a brief introduction to the important considerations required when thinking of setting up a business and the steps you should take to remain compliant with H M Revenue & Customs guidance;
If you are thinking of starting a business, you should consider, among other factors, the nature of the business, the profit potential, the anticipated rate of business growth, the degree of risk involved and the impact that being a business owner will have on other areas of your life.
Prepare a business plan
In order to be successful a business plan is very important and areas that a plan should consider may include:
Market analysis and research– your research should include details on your anticipated customers, suppliers, margins, trade ratings and registrations. This does not necessarily have to cost money but if you don’t know the sector well enough you are likely to make some costly mistakes.
Forecasts– for business growth, cashflow forecasts, profitability forecast, possible staff requirements.
Funding requirements and sources of funding– this may include bank loans, personal loans, grants and possibly external equity. If several sources of funding are available the tax treatment of the funding may be an important consideration.
Business structure– the structure that will best meet your needs for example sole owner, limited company, partnership or limited liability partnership.
Registration for VAT, Payroll schemes or self assessment so that you plan tax efficient timing the appropriate registrations we have provided details below to assist you.
Aston Hughes & Co can help in any of the above areas and should you wish we can use planning or marketing software to assist you in preparing a professional business plan.
HM Revenue & Customs registrations
Self employed and new partners
Once the business is ready to start trading you will need to inform HM Revenue & Customs within 3 months from when you became self employed. You can perform this task though the following link HM Revenue & Customs: First steps to register as self-employed
If your business is only expected to be small then it may be beneficial to apply for ‘Small earning exemption’ from class 2 national insurance.
When choosing a year end it is usually beneficial for sole traders and partnerships to make their year end close to the end of the tax year (5 April) as this will avoid the owners of the business paying tax twice on their initial profits.
If you would like Aston Hughes & Co to help with any of these tasks then please get in touch.
A business is required to register for VAT once the turnover in the previous 12 calendar months (note this is not at the end of an accounting year) exceeds the threshold for the current year (See our tax information page for threshold) or there are reasonable grounds for believing that your turnover for the next 30 days will exceed the same threshold.
If you buy a business as a going concern then the above rules will not apply and it is important that you obtain professional assistance.
There are some industries where it will be beneficial to register for VAT immediately. The most common industries that this applies to be farming, some other food supplies, supplies to VAT registered businesses in the EU, and the construction of new residential and charitable buildings.
Some industries do not need to register for VAT as they are exempt from VAT.
Many VAT schemes are available to businesses which are likely to save you money and time Aston Hughes & Co can provide professional advice so that VAT registration is planned in a tax efficient manner.
PAYE/NI and employment status indicator
You may need to run a payroll if you intend employ staff from the outset or if you are the director of your Company. We can run a payroll for you or alternativily you can register and run a payroll yourself, to do this you will need to notify the HM Revenue & Customs by telephoning the New Employers Helpline (0300 200 3211) to establish a PAYE record.
You may have someone who you consider to be self employed who works for you regularly. HM Revenue & Customs are keen to ensure the correct status of employed/self employed is adhered to, you will be liable to any additional tax payable. You can check the status of an individual by answering the questions on the following link HM Revenue & Customs: Employment Status Indicator
Over the past few years HM Revenue & Customs have been increasing their powers and are now able to perform in year compliance checks at business premises. They are usually able to do this with only 7 days notice and if your business is run from home they are entitled to visit you at home.
The minimum records you are required to maintain are usually;
- A record of all your sales, with copies of any invoices you’ve issued
- A record of all your business purchases and expenses
- Invoices for all your business purchases and expenses, unless they’re for very small amounts
- Details of any amounts you personally pay into or take from the business, including stock items
- Copies of business bank statements
We will be happy to set you up with a suitable filing and bookkeeping system.