Thinking of starting a business? Read through some of the basics.
Test the idea
You’ve come up with a great idea for a product or service that you think is currently lacking in the market, or maybe its something that you think you can do better than the competition.
The first thing to do is to research the market. What are your potential competitors charging for this service or product? If it’s a completely new prospect, then do your research to establish what people would be prepared to pay and consider whether you have an idea that you’d want to patent.
If you have a product, run some tests – do customers like it? If necessary revise your offering and re-test it.
Draw up a simple business plan
Now you’ve hit upon the right prospect, its time to get some numbers. What funds will you need to set the business up? Will you need premises? Employees? Over what time frame will you start generating sales and getting cash in?
You can easily download a template for a basic business template online, but if you’re looking to attract investors, then you’ll probably need something more formal and an accountant can help with this.
Now that you’ve an idea of how much funds you need to get your business up and running you need to seek out some sources of funding. Most start-ups are initially funded by the founder, or the family, but there are a range of other providers of funds to start-up businesses.
One option to try initially is to try to seek funding from the Government. There are 813 schemes run by various Government agencies offering finance and support for your business. Take a look at the available schemes here.
Another option which has become more popular in recent years is crowdfunding. Essentially, you make a pitch to investors and offer a % of your company in return. Think of it as Dragon’s Den online. A good site for getting the general idea about crowdfunding is Crowdcube. The investors in crowdfunding are usually looking to make a tax-efficient investment – which means you will be looking to HMRC to grant you SEIS status – more below.
Get a company set up
It’s time to get a company set up. This isn’t difficult to do and you can be up and running with your own company typically in less than 24 hours. Companies House is the government body that looks after companies, but we prefer to use Companies Made Simple. If you are uncertain of how you want to structure your company, how many shares to issue etc., then its a good idea to talk to an accountant before setting this up.
Register with HMRC
Once you’ve registered with Companies House, they’ll register your business for corporation tax – the tax that you will pay on any profits that the business makes.
But there are other taxes that you may need to register for. If you are going to have employees, you’ll need to register as an employer with HMRC. Then you will need to operate a payroll, and deduction income tax and national insurance from any employees, and pay any Employers’ NI that the company.
If you anticipate that your sales are going to be above £81,000 then you’ll need to register compulsorily for VAT. You can make a voluntary registration for VAT too, which has some advantages and disadvantages.
Finally – if you are looking to attract investors, it is very beneficial to have SEIS (Seed Enterpise Investment Scheme) and EIS (Enterprise Investment Scheme) status, as this offers potential investors in your business certain income tax and capital gains tax reliefs which can make investing in your business more attractive.
Give Robinson Price a shout if you’d like to have an informal chat about any of the above.