Starting your own business is exciting. You have a fantastic idea, you’ve already thought of a name and you’ve done some detailed market research. Now you’re ready to leave employment and become an entrepreneur.
Before you can start making money, there are a few practical things to consider. Here’s my seven step guide to setting up your own business.
1 – Write your business plan
A business plan is a great way to start planning. In it you will set out what your business does, identify your target market and recognise any potential pitfalls. Your business plan also starts you thinking about cash flow – potential costs in starting up as well as monthly bills.
2 – Register with HMRC
It’s important to register your new business with HMRC. You can do this yourself, but unless you are familiar with tax, now is probably the best time to find an accountant. Choose one, like myself, that specialises in supporting small businesses and sole traders and can advise you about benefits etc.
Whether you do it yourself or leave it to your accountant, once you register with HMRC you’ll receive a UTR (Unique Taxpayer Reference) which you need when you complete tax returns and pay National Insurance.
3 – Set up a separate bank account for your business.
It’s best to do this from the start as it saves a lot of confusion later on as your business grows. With separate accounts you can easily identify personal and business transactions.
As well as good housekeeping, having a separate account makes it far easier for your accountant to identify business expenditures and manage your bookkeeping.
4 – Keep excellent records for your accounts
There are plenty of ways to manage your record keeping, but it may come down to costs and the type of business you run. A simple Excel spreadsheet may be adequate for a self-employed person working from home. When you start managing stock or sending multiple invoices, automated online software will make things easier.
Many businesses use Xero, and it’s one I recommend. It simple to use and starts from as little as £2 a month via the Xero Partner scheme, available to my clients, or £5 a month direct from the provider.
Insurance is often overlooked by self-employed business owners, particularly if you work from a home office. There are plenty of different options to look at, from general insurance to something specific to your industry, and which cover professional indemnity or personal liability.
You also need to check your car insurance policy; if you are using your personal vehicle for business purposes, even driving to a meeting, you need to be insured.
6 – Manage your professional credentials
Depending on your profession you may require annual membership to a professional body. As an accountant I am a member of CIMA. I maintain my annual membership and credentials in order to run my business. The good news is that you may be able to claim your subscriptions as a business expense.
7 – Consider your marketing
No matter what industry you go into a digital presence is becoming a necessity. Factor in a budget for your initial set up and marketing costs, including building a website and getting professional headshots. Your marketing will probably include some social media and, potentially, networking. It’s all part of bringing your new business to the attention of your local business community and making an impact.
As an accountant that works closely with small businesses, I have seen plenty of new enterprises launch without being fully prepared. If you would like clear, friendly advice before you become self-employed, please call me today on 01922 430 997.