Tips for Setting up a New Business if its your first time

Business tips for people new to running a business

Tips for starting and setting up a new business.

Starting a new business is both exciting and a bit scary, and there is obviously a lot to consider.

Tips on Company Type

There are a number of options regarding the type of legal structure that your adopts.

The main two types that most Small & Medium sized businesses (SME) use are:

 

  • Limited Company, known as Ltd for short.
  • Sole Trader

 

Limited companies are a bit more complicated to set up than Sole Trader businesses.

Companies House   https://beta.companieshouse.gov.uk/   is the UK government body that is responsible for registering Limited Companies in the UK.

Setting up a Limited Company has both advantages, and disadvantages, compared with a Sole Trader business.

One advantage is that the company is independently liable.

This means that the company is in effect like a person. Therefore the company can buy property and assets in its name, take on debts etc.

Having a limited company structure also limits the liability of the company directors, though their are still some things that can affect directors, so legal advice is recommended.

Disadvantages of running a Limited Company include increased set up costs & administration. For example accountants tend to charge more for Limited Companies, than for doing the accounts of a Sole Trader business.

As we are a Marketing business it would be strange for us not to talk about customer perception.  In the Business-to-Business (B2B) market, many larger businesses will only deal with Limited Companies.

This then is obviously a consideration, depending on your target customer.

If you intend to work with larger businesses then they may also expect you to be VAT registered.

Legally speaking you are not required to register for VAT until your business (applies to both Limited & Sole Trader businesses) reaches a certain annual turnover. However voluntary registration is available.

Sole Trader businesses can be simply and easily set up by just informing the HMRC that you have started a business. You will then receive a letter every April, telling you that you need to complete a tax return by the end of the  following January.

These tax return are now usually completed online, and you declare your anuual business profits / losses.

Then the HMRC will automatically calculate what tax you owe, or if you have paid to much. Paying to much can occur if you also have other ’employed PAYE’ work, as the tax codes are sometimes wrong.

 

 

Craig Miles: Marketing & Tech at Yesway Digital.
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