Updated: Jan 28, 2020
The start of a new year, and for this year, a new decade, often acts as inspiration to make big changes, or start a new project or business idea you have been dreaming of. If this is you right now, but you are really not sure how to start making the first steps to being your own Boss, here are the key steps to follow when getting started.
Pick a Business Name Use Google to search for any existing companies using your preferred name, as it is important to check that there is not a company already using the name. You can also use the search facility on the Companies House website to search for registered companies that could be already listed with your preferred name, and check search facilities on Domain purchasing sites. It is also important to check that a name has not already been trademarked – check at www.trademarks.ipo.gov.uk
Open a Separate Business Bank Account
If you are a Sole Trader, or registered as a Partnership, opening a separate Business Bank Account is not a legal requirement, however, having a separate Business Bank Account will save you time, and effort, when trying to sort out your business expenses from your personal funds. It also helps you build up a credit history for your business, which helps if you want to apply for any business loans in the future. There is also a perception that having a separate Business Bank Account makes your business seem more professional.
Register with HMRC
You do not need to register as a Soletrader, or a Partnership, if you have earned less than £1000 in that tax year. If you are planning on registering, it is very simple to do this online with HMRC. You just need to register at www.gov.uk/log-in-file-self-assessment-tax-return and this will open you up an account. If you will be registering as a Limited Company, you need to do this with Companies House at www.gov.uk/limited-company-formation/register-your-company
Registering for VAT
You do not need to register for VAT until your turnover reaches £85k, so for most small businesses you do not need to worry about this right at the start. It is important to keep an eye on your turnover however, and if you are coming up to £85k, you can register for VAT online on the HMRC website at www.gov.uk/vat-registration/how-to-register If you are unsure about when to do this, a Bookkeeper or Accountant will be able to advise you.
Keeping Track of Your Finances
As you start trading, it is important to have a method in place for recording all your incoming, and outgoing funds. Ensure that you keep all receipts and establish a process right from the start of keeping a track of all transactions and payments. Depending on the size, and complexity of your finances, different people use different methods for managing their money. Small start-up businesses may start with using a very simple Excel spreadsheet, or even keeping a note in a notepad if the number of transactions are few and easy to manage! There are also a variety of different software options available, which for a fee can be used to keep all transactions recorded in a way that will make doing your Tax Return easier and quicker.
If managing the finances is just not something you want, or feel comfortable, doing, you can also outsource it to a Bookkeeper. A Bookkeeper will be able to find the best way of managing the finances for your business, and will ensure that everything is kept up to date and recorded correctly – so that it is all ready for when you come to submitting your Tax Return. They can also keep an eye on your turnover, in case you come close to the VAT threshold.
Whichever method you choose, just make sure that you keep on top of your finances to ensure that you know exactly how your business is doing, can identify any potential issues, and can sail through submitting your Tax Return on time.