Starting a Business
So you’re considering starting your own company? As a new business owner, we’ve got some pointers on everything from developing a business strategy to comprehending tax, benefits, and legal frameworks.
While it may appear daunting, you may become one of the UK’s six million small and medium-sized enterprises with passion and perseverance.
Ideas and inspiration for starting a new business
Of course, the first step is to decide on a business concept. It should be something you’re enthusiastic about, so you’ll be glad to invest your time, money, and effort into making it a success.
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Start by looking at Google Trends, conducting market research, or even creating a blog or social page to see if there’s interest in a product or service.
You’ll need to carve out a niche for yourself so that you can stand out to customers — is there a market need for something? Can you put your existing talents and expertise to good use? Do you have a distinct point of view on something?
Next, consider if you want to start a business online or at a physical location. If you’re thinking about starting an internet store, it can be more cost-effective to do so from your own home.
What do I need to start my own company?
You’ll need the following in addition to a brilliant idea that you’re passionate about:
- Courses & training – Depending on your industry, you may require specialised training or wish to pursue a broad business qualification.
- licences – check the government website to determine if you need a business licence to serve food, play music, or trade on the street, for example.
- Make sure you budget for any specialised equipment or tools.
- If you’re opening a shop or selling your own creations, you’ll need to gather your inventory.
To get started with your new business, use the checklist below:
- Look for new business names.
- Select a legal framework.
- Make a fresh business plan.
- Obtain funds and financing
- Make a marketing strategy.
- Purchase new commercial insurance.
- Figure out what you need to do for tax purposes.
- Make a system for keeping track of your business records.
1. Look for new company names.
Choosing a name for your company is crucial since it reflects the personality of your brand and helps you stand out. It’s your chance to get creative with your name, which should be unique and appealing to your target audience.
It’s also important to comprehend:
- how to distinguish yourself from your competitors by defining your brand
- what you should do to safeguard your intellectual property, such as patents and trademarks
2. Decide on a legal framework
After that, you’ll need to decide on a legal structure for your company:
- The simplest corporate form, yet there is no legal separation between you and your company.
- If you’re beginning a business with a partner or partners, you’ll need to form a partnership.
- Limited company — a complicated structure with a lot of paperwork, but your firm is legally separate from you. Some people hire a professional, such as an accountant for sole trader, to assist them set up their business, but you can do it yourself.
3. Compose a fresh business strategy.
A business plan is a crucial document for any company, regardless of its size. It aids you in determining your strategic objectives, financials, market research, and any roadblocks.
You’ll also need to set a budget as part of any new business strategy. The cost of starting a business varies greatly depending on factors such as whether you need to purchase specialised equipment, rent a business location, or operate your business from home. For assistance with budgeting, check out our budget calculator and cash flow forecasting guidelines.
4. Obtain financing and funds
What is the minimum amount of capital required to start a business? It will differ based on the nature of your goods or service. However, as previously stated, you’ll need to consider this question before starting your new business.
If you’re just getting started, you might not require much money up front.
However, if you’ve identified a number of charges in your budget, you’ll need to figure out how you’ll pay for them. Will you make advantage of your savings? Or will you seek assistance in beginning a new business (such as loans from friends, family, or a bank)?
Keep in mind that incentives for fledgling enterprises may be available to help with the financial strain. The advantage of a small company grant over a loan is that you usually don’t have to pay it back.
It’s a good idea to look into government support for new enterprises. The Start Up Loan, offered by the British Business Bank, is another government-backed programme. At a fixed interest rate of 6% per year, you can borrow up to £25,000. You’ll also get a free year of mentoring.
5. Make a marketing strategy.
Now that you’ve sorted out your finances, it’s time to consider how you’ll attract clients and expand your firm.
When it comes to promoting a new firm, you’ll need to think about branding, marketing, and how you’ll balance online and offline promotion.
Here are a handful of our best recommendations:
- Conduct competitive research to better understand the industry, set your prices, and discover a strategy to differentiate yourself.
- Create a social media presence — Using technologies like Facebook Shops and Instagram, you can show off your brand’s personality, engage with customers, and even sell your products on social media.
- Create an SEO-optimised website – optimise your website for search engines so that people may find your company and comprehend the items or services you provide.
- Sending emails and newsletters to your consumers is an easy and cost-effective way to stay in touch and increase sales.
- Use flyers and print marketing to reach out to potential customers in a real way.
- network at industry events — attend virtual or in-person events to learn about your sector and create relationships.
6. Get a new company insurance policy.
The type of business insurance you’ll require is determined by the nature of your company. You may design your protection to protect yourself against the costs of everyday hazards like accidents, damage, and legal fees, whether you run an internet store or provide a service. If you need to safeguard stock or tools, you can also add specific covers.
You can choose from a variety of covers, including:
- If clients come to your business or you work on client sites, you’ll need public liability insurance.
- Professional indemnity insurance protects you in the event that a client suffers financial loss as a result of your negligent advice, services, or designs.
- Employers’ liability insurance is required by law if you have employees.
- insurance for legal fees
- Self-employed health insurance is a low-cost policy that allows you to see a doctor more quickly.
- Small company health insurance Provides coverage for you and your staff at an affordable price
7. Figure out what you need to do in terms of taxes.
It’s critical to understand the legal and accounting duties that come with owning a business. There is a £1,000 tax-free allowance, but you must register with HMRC or Companies House after that.
Sole traders must be able to:
- HMRC must be contacted.
- submit a self-assessment tax return on a yearly basis
Limited liability companies must:
- Become a member of Companies House.
- You must pay corporation tax on your business profits.
- fill out a business tax return
- VAT must be paid.
- You’ll also need to send a Self-Assessment if you’re self-employed.
One of the advantages of becoming self-employed is that you can deduct part of your expenses from your tax bill. Our guide on self-employed tax deductible expenses delves deeper into the expenses you can deduct from your business revenue when calculating how much tax you owe.
Starting a business alongside full-time employment is also a fantastic method to test your business idea without taking on too much financial risk – but make sure you grasp everything there is to know about paying taxes when you have a side hustle first.
New business tax relief, such as business rates relief and VAT relief, may also allow you to reclaim part of the tax you pay.
8. Establish a procedure for maintaining business documents.
It’s critical to be organised after you’ve figured out what you need to do for tax so you can meet your duties at various points throughout the tax year.
If you don’t keep track of your records, you’ll waste a lot of time organising documents when it’s time to perform your Self Assessment — time that could be better spent running your business or relaxing and recharging.
To begin with, it’s a good idea to keep your personal and business finances separate. This is because certain allowances, such as tax-deductible spending, can only be used for business reasons, and it’s far more difficult to separate money flowing in and out when you just have one account.
Finally, you must retain business records for a certain period of time. If HMRC requests them, having precise and well-organised business documents might assist you avoid getting into problems in the event of a tax audit.
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