How do I start a Business? – THE BASICS
Ok so let me start with the basics, do you need an accountant to start up a business? No, it’s an easy process. Start with whether you want to operate as a sole trader, partnership, or limited company. (There are more options but these cover 99% of the businesses I meet).
STARTING YOUR BUSINESS ALONE
Quite simply, if you’re setting up alone you can go for the sole trader option or the limited company option. The sole trader option is FREE, there are zero set up costs. You would be personally liable for any debt (loss) you create. Setting up a business as a limited company ensures that you, as a director, are not liable for any debt. The business can be “wound up” if it fails without any recourse to the directors.
STARTING YOUR BUSINESS WITH ANOTHER PERSON
If you’re setting up in business with someone else there are two options: The partnership option; which is theoretically two people operating as sole traders. If you plump for the limited company option then you have two directors who split the shares. For more info on this, have a look here https://www.gov.uk/set-up-business
THE LEGAL BIT
Once you’ve set up a limited company – at a cost of just £12 if you do it yourself – you have to file your accounts on time. Failure to do so will land you in hot water with HMRC. Accountants will charge more to incorporate your business for you. I’ve received quotes for as little as £75 and I won’t scare you with the opposite end of the scale! It’s easy to do it yourself using this link https://www.gov.uk/set-up-limited-company
BUSINESS BANKING V PERSONAL ACCOUNTS
MOST IMPORTANTLY, open a business bank account. It’s messy and frowned upon to use a personal account to run your business. If it’s a limited company then you MUST. A limited company is a legal entity in its own right once it’s incorporated.
There are ways to get FREE banking by becoming a member of FSB (The Federation Of Small Businesses). The charges with most business accounts are low. Most high street banks give 12 month’s free business banking to get you started. During the Covid-19 crisis, it has been hard to get into a bank and open an account. We recommend Tide or Starling which are online banks. You can have an account opened and ready to use in a matter of hours.
WHEN TO CONSULT AN EXPERT
You will need an accountant or book-keeper to prepare your accounts if you set up a limited company. This can be a daunting process and we’ve made mistakes here in the past. Please feel free to contact us if you want advice and support with recommendations.