Every business begins with an idea, but transforming that idea into reality requires more than just creativity. Essential elements like planning, skills, resources, time, and a touch of luck all play crucial roles.
To facilitate the early stages of your business, we have compiled a comprehensive checklist that will serve as your roadmap for successfully establishing and running your new venture.
Identify Your USP
A crucial step to a business startup is identifying your unique selling point (USP). Clearly define what sets your business apart from the competition, capturing it in a concise two-sentence statement that you can memorise. This USP will become a key part of your pitch to investors and potential customers.
Develop a Comprehensive Business Plan
As cliché as it sounds, there lies a lot of truth in the phrase “failing to plan is planning to fail.”
Creating a well-structured business plan is essential. You need to be able to present an overview of your current business status and articulate your vision for its future growth and development.
At Ryans, we understand that with all the other daily pressures of running a business, strategic planning is often not given the attention it needs. This results in rushed judgements, over or under-capacity, or missed opportunities- and of course nobody wants that.
That’s why we work with you to create a detailed business plan. Our team of experts can help with the following:
- Decide on the most suitable structure for your business – sole trader, partnership, or limited company
- Prepare a business plan, cash flow projections, budgets, and trading forecasts
- Assess your finance requirements, advise on the best sources of finance, and draw up the necessary proposals
- Establish a good working relationship with your bank
- Complete any registration procedures with Companies House and HMRC
- Deal with company secretarial issues
- Set up a recording system for your internal use and for complying with statutory requirements
Secure Web Domains and Trademarks
Ensure you have a website for your business by searching for appropriate domain names and registering them. Additionally, consider the importance of trademarks and copyright.
Establish Your Business Structure
There are two main ways in which you can set up your business; either as a sole trader or a limited company.
Limited Company
A limited company is a business structure that is registered at Companies House. It is a legal entity and is completely separate from its owners, meaning it is responsible for its own finances and debts, so owners can benefit from less financial responsibility (limited liability).
Sole Trader
A sole trader operates as a self-employed person who registers a business with HMRC. Sole traders can work on their own, or employ other people to work for them, however they will be entirely responsible for the business and its liabilities as there is no legal distinction between you and your business.
While you don’t need to register with Companies House, you are still required to register for Self Assessment with HMRC to report your earnings and expenses so you can accurately pay Income Tax and National Insurance contributions.
Fresh thinking, smart support.
How can our experts helpWhich is Best for My Business?
There are pros and cons to both, so it’s important to think carefully about your own needs and the needs of your business. Here is a list of advantages and disadvantages you should consider before choosing your business structure.
Advantages of Being a Sole Trader:
- You can register online in minutes.
- There is no need to incorporate the business at Companies House.
- No cost to register the business.
- Less bookkeeping, accounting and filing requirements compared to limited companies.
- Lower accounting costs.
- Full ownership of the business and therefore full control.
- Quick and easy to make decisions.
- All profit after tax belongs to the sole trader.
- No business or personal details are disclosed on public record.
Disadvantages of Being a Sole Trader
- Sole traders are responsible and liable for all business debts and claims as there is no legal distinction between the individual and the business, therefore there is no distinction between personal and business finances.
- Can be trickier to raise capital.
- All taxable income is liable for Income Tax and National Insurance contributions.
- Less tax-efficient than a limited company.
Advantages of a Limited Company
- A distinct legal entity separate from its owners.
- Limited liability, meaning members’ personal finances and assets are protected beyond what they agree to invest in the business.
- Often viewed as larger and more established businesses, even if they are run by just one person.
- More tax-efficient.
- Directors are able to pay themselves a salary and dividends.
- Limited by shares companies can sell shares in exchange for capital investment.
Disadvantages of a Limited Company
- Must be incorporated at Companies House, though it doesn’t take long or cost much.
- Must register with HMRC for Corporation Tax.
- Can cost more to set up and operate.
- It isn’t possible to register a limited company if you are an undischarged bankrupt or disqualified director.
- Information about the company is on public record, including the registered address, service addresses, director details, shareholder details, filing history and financial activity.
- Accounting and filing requirements are often more complicated and time consuming than sole trader admin.
- You can’t remove money as and when you please as you must have enough profit left after the deduction of tax and other expenses before doing so and must follow strict procedures to remove money and pay yourself.
Verify Profitability Potential
Determine the feasibility of profitability for your business. Utilise accounting software to run profit and loss forecasts. Seek the advice of an accountant or financial advisor such as Ryans to assess your business’s profit potential accurately.
Establish a Dedicated Business Bank Account
From the outset, avoid using your personal account for business transactions. It is prudent to maintain a clear separation between your personal and business finances. Consider obtaining a credit card and setting up a PayPal account to facilitate transactions.
Obtain Adequate Business Insurance
Regardless of the size of your company, having appropriate insurance coverage is essential. Consult with an insurance broker to find the most suitable insurance package for your specific needs.
Complete Tax Registration
Ensure you register with HMRC either for self assessment or corporate tax. Addressing these formalities at the outset is highly recommended.
Consider the Legal Aspects of Setting Up A New Business
There are lots of things to consider when it comes to setting up a new business, however, it is vital to set aside time to ensure all of the legal obligations have been met. That’s why we’ve put together this handy guide to legally setting up a new business to help you make sure you’ve got it all covered.
Work with a Business Advisor
Enlist the guidance of a business advisor or a knowledgeable financial expert who can provide honest feedback about your business. At Ryans Chartered Accountants, we have years of experience advising local businesses and a wealth of expertise for you to draw on.
With straightforward and in-depth advice, we can establish your current position and make informed decisions to help your business function at its best in the future.
Get in touch with our team today to find out more.