I have a business idea – how do I make it a reality?
You might have an amazing idea for a business, but if you have no idea how to get it off the ground it can seem daunting and potentially hold you back from taking the plunge to start your own business. There are many things to consider, from the legalities to the financials, and here we will break these down into steps to help make the process a little easier.
Where do I start?
First things first – you need to choose a business structure. This means deciding whether you are going to set up as a sole trader, a business partnership or a limited company. As a sole trader, you will be responsible for running your business as an individual, although you can still employ staff if you wish to. You will be personally responsible for any profits or losses the business makes, and for paying taxes on your profits.
Being in a business partnership is very much like being a sole trader, except you will personally share responsibility for your business with the person or people with whom you set up your business.
If you set your business up as a limited company then it is the business, rather than you as an individual, who is responsible for everything it does. This also means the business’s finances are separate to your own personal finances. By setting your business up as a limited company you reduce any risk of personal liability, but there is a lot more to take into consideration regarding taxation and reporting requirements.
You will need to register your business with HM Revenue & Customs (HMRC) if you are setting up as a sole trader or business partnership, and if you are setting up as a limited company you will need to inform Companies House and HMRC.
How can I raise funds to set my business up?
There are various ways to raise money to help set your business up. Many will consider applying for a bank loan, but this isn’t your only option. There are a number of organisations which offer grants to small businesses and start-ups, as well as Government start-up loan schemes. You could also seek investment from individuals or other businesses, ask for help from family or friends or even use a crowdfunding website such as Crowdfunder to raise the money you need.
My business is almost up and running – now what?
It’s a good idea to have a bank account for your business that’s separate from your own personal bank accounts as this will make it easier to keep track of your business’s financials. You also need to think about where you will work from. If it’s convenient to work from home then this might be your best option as you won’t have to pay extra for renting (or even buying) business premises. However if you do work from home, it’s a good idea to have a dedicated work space separate from the rest of your living space to avoid distractions.
Are there any laws or regulations I need to be aware of?
Yes, but it depends on the nature of your business. For example, if your business involves things you have created, it’s a good idea to familiarise yourself with intellectual property law. Advice from HMRC states:
“Copyright, patents, designs and trademarks are all types of intellectual property protection.
Your intellectual property is either protected automatically from theft or copying, or you can register it to protect it.”
You will also need to consider health and safety regulations, which are particularly important if you plan to have employees working for you. Abiding by health and safety regulations will ensure that you are working within the law and there is much less chance of you or your business being held liable due to injury or illness caused by unsafe working practices.
Also, familiarise yourself with tax laws to ensure you pay the correct amount of tax, otherwise you could receive some hefty fines. You should also look at different types of business insurance and take out the suitable insurance to protect your business.
How do I deal with the financials by myself?
To begin with, you may not find it too difficult to keep on top of your businesses accounts. Recording all financial data and keeping all receipts and statements will help, as well as setting aside dedicated time to do your bookkeeping. An effective filing system will keep everything organised and will save you time and hassle when looking for particular documents. You could also consider taking a simple course in bookkeeping, and there is an abundance of advice and help to be found online.
However, as your business grows, you may find you are too busy with the running of your firm to take time out to do bookkeeping, and therefore there’s the risk that your accounts will suffer. Also, if you lack the knowledge required, the task can seem impossible, especially if you have experienced a faster growth than you anticipated. That’s where employing an outside accountant can benefit you greatly. Kirk Hills will deal with the financials and bookkeeping needs of your business, giving you peace of mind and allowing you to get on with the important task of running your business, knowing that your financials are accurate and up-to-date.