Starting out in business
JOHN MATTHEWS, partner at Ensors Chartered Accountants, offers some advice for those thinking about starting up their own business
DESPITE the timid nature of the recovery in the British economy there is an increasing sense of optimism returning within the small business world, with more and more people considering starting their own business.
Whether this decision is made through choice, necessity, opportunity or natural progression, taking good advice early on is essential.
After exploring and researching your market to make sure that there is a living to be made in what you plan to do, the next question is how do you do it?
Do you operate as a sole trader, a partnership or a limited company? What are the implications of each? The answers will, to a certain extent, depend on your personal circumstances and your projections of turnover and profit.
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The area of VAT registration is another that will require careful consideration. If your customers are private individuals, you may choose to not register for VAT until you reach the VAT compulsory registration limit. Alternatively, if your customers are VAT-registered businesses, VAT will not be an issue to them as they will just reclaim or recharge it.
You should also consider whether your intended market has any particular obligations or customs which imply that a certain method of trading is required. For example, the field of freelance consultancy has a large number of individuals working through their own limited companies in order to reduce the number of attacks from HM Revenue & Customs yet still allow them the flexibility and freedom to work for whomever they desired.
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Finally, if you plan to employ staff you will need to use the PAYE scheme and file your PAYE returns online. As a result, you will need to consider the costs of keeping your IT system up to the standards required by HMRC or using the services of a bookkeeper or accountant.
With more than 90% of all employers having fewer than 50 employees and sole traders and partnerships making up approximately 40% of the British economy (2008 figures), small businesses are the lifeblood of this country.
Make sure yours succeeds by getting sound advice early on.
n For further information contact John Matthews at Ensors Chartered Accountants on 01473 220036 or email email@example.com .
This information is given by way of general guidance only, and no action should be taken solely on the basis of the information contained herein. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.