ADMIN & FACILITIES
Getting Your Start-Up Started
How to take the fi rst few steps to becoming your own boss…
In this age of celebrity entrepreneurs and a media saturated with overnight success
stories and so-called business gurus, who seem to dazzle everyone they come across, you are almost certainly not alone in wondering if you have what it takes to become part of this exclusive club. After all, they are successful because they
have that indefi nable something, that spark, that drive, that work ethic that sets them apart from the rest of us. Aren’t they? Well, evidence suggests otherwise. The latest
available fi gures from business think tank the Centre For Entrepreneurs show that nearly 660,000 UK companies were established in 2016, up from 608,000 in 2015. This year it looks likely that the record will be broken again, according to the CfE’s Startup Tracker. So you see, while there are varying degrees
of success, it’s not an exclusive club at all. In fact, according to the Offi ce of National Statistics, the
Becoming a sole
trader can give you greater fl exibility when it comes to offi ce space
oh, possibly money. But we will come to all that
in good time. First, you need to decide what
sort of company you actually need to register as. Much will depend on the type of business you are creating, and it essentially boils down to which is the most
effi cient in terms of your tax aff airs, work load, and the risk involved.
Sole Trader
The simplest form of company to set up which gives you exclusive ownership of the business and its profi ts (and therefore any losses too).
It is low cost, simplistic, gives you full control and there is little to no fi nancial reporting required. But it may mean you pay more tax and you are personally liable for any debts. You will need to register for self-assessment and fi le a tax return every year.
Partnership Choosing your type
of business entity is a balance between risk and reward – and how much responsibility you're willing to take
Sometimes pooling your talents is the obvious way to go if you have a trusted colleague or friend who can make your company greater than the sum of its parts.
It may also make it easier to raise fi nance too. In a nutshell, partners share the business’s profi ts, and each partner pays tax on their share. But be sure to have clear agreements in place on ownership and liabilities to avoid messy disagreements if for some reason the business has to be wound up.
Simply Business
One of the UK’s biggest providers of small business insurance, protecting over 425,000 customers with public liability, professional indemnity, and employers’ liability. Their award-winning service allows the self- employed to compare quotes and buy online, with every policy tailored to specifi c requirements.
simplybusiness.co.uk
12 Be Your Own Boss distributed with
Limited Company A private company where the owner or owners are legally responsible for all debts to the extent of the amount of capital they have invested. It means less personal fi nancial exposure, is more favourable in terms of personal taxes paid and provides greater ability to work with bigger, corporate clients. Annual accounts must be in the public
domain so you will need a good accountant. Limited companies need to be registered at Companies House. You will also need to pay Corporation Tax. Payments to directors can
take the form of dividends, however, which have quite a high tax threshold. So it can be a very ‘tax effi cient’ option.
Limited Liability Partnership Some or all partners have limited liabilities. More fl exibility can be included in a members agreement. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence. Profi t is taxed as income and partners must disclose that income.
PLC Steady on, Elon Musk, you’re not ready to take your dog-walking business to NASDAQ yet. It can take years for a company to grow to a size suffi cient enough to be able to issue even a small number of shares.
VAT You are legally required to become VAT registered if your turnover of ‘taxable supplies’ (anything you sell or buy that is subject to VAT) exceeds £85,000 per year. Some companies with a lower
Setting up the right type of
company arrangement from the outset is vital for getting your project off to a good start and increases its chance of success
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number of self-employed people in the UK has increased from 3.3 million people (12% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017. And the fastest growing part of that is people
working on their own, without employees to their name. So, if you’re wondering how you join this
fast-growing part of the workforce, curious as to how you can become your own boss, then you probably already possess the most vital ingredient. But, you also need know- how, maybe an idea and
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Whatever type of company you decide to set up, a good accountant might be the best investment you make.
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turnover register voluntarily
because while you will have to charge VAT on your services, you can also claim back VAT on the services and goods that you are charged for. There is a fair amount of extra paperwork
required and you will need to fi le a quarterly VAT return, which means keeping hold of all your relevant receipts. Again, the best solution is to fi nd a good accountant.
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Images: Unsplash,
istock.com
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