Starting your own business can be exciting, worrying and stressful and it is important to understand the implications of your decisions and do thorough research before making the jump. The following tips should help you make the best decisions for your business.
Sole Trader or Limited Company?
Whether you will be a small business or a limited company is a really important decision that will impact how your business pays its tax and your legal and financial responsibility. As a sole trader you will be classed as self-employed and can keep all of your businesses profits after you have paid tax on them – you can find out more about setting up as a sole trader on the HMRC website here. To set up a limited company you will have to register your company with Companies House and register for Corporation Tax. You can find out more about setting up as a limited company here.
Who are your competitors?
Whilst researching your potential new business you need to assess how crowded the market place is. How many competitors do you have, how established are they, what are their USP’s and what is the differences in their pricing? You can find out how many of your competitors are in your area from online directories such as Yell.
You need to forecast when you can start paying yourself, how much money you need to live on and how much your business can afford to pay you. Some people prefer to have a part time job whilst setting up their business so they have a steady income and can invest any profit into their businesses growth. Work out your projected turnover for the first year of your business and any personal outgoings such as your mortgage/ rent, car payments etc and see if you will need another source of income to keep you afloat.
Write a business plan
Writing and sticking to a well researched business plan is integral to the success of a business. A business plan states your business objectives (what you want to achieve), the steps you will take to achieve them and your financial forecasts and activity. Your business plan could include if you rent or buy office space or work from home, if you are going to hire staff, the projected rate of growth for your company and marketing activity.
When starting a business you need to know how much money you have and how much is coming into and leaving the business. A really easy way to do this is by using a bookkeeping software like KashFlow where you can easily keep track of your business’s finances. KashFlow integrates with HMRC which makes your VAT report a lot easier and has lots of other business critical features such as pay now buttons on your customisable invoices making sure you can get paid faster. Kashflow sends automated reminders to your debtors, meaning you can focus on growing your business instead of calling those who owe you money and there is a great project management tool for working out the ROI for any business activities. Take inspiration from long time KashFlow users Patchwork for more expert advice on how to start and grow your business.
KashFlow is jargon free accounting software designed for sole traders, start ups and small businesses. You can manage your business finances from anywhere and create professional, branded quotes and invoices in minutes. For a free, no-obligation 1-2-1 demo of the software just call the KashFlow on boarding team on 0800 133 7529.