A Guide to Business Start-up: Starting a Business UK
. So you want to start your own business, but not quite sure where to begin? Maybe you have a fledgling business but need help to move it forward. Coddan CPM is here to help you on the road to self-employment, by offering support from business advice surgeries. Whatever stage you are at, from idea generation through to trading, we can offer valuable support and resources.
Thinking of starting a business? Let Coddan helps you become a successful entrepreneur. This web site, organised by topic and province, provides reliable information on market research, business name and business structure, preparing a business plan, financing, taxation, hiring employees, doing business on the Internet and much more!
Many people start a small business in order to enjoy the perceived rewards of freedom and independence. This is understandable because owning your own business can offer you the opportunity to experience freedom: the freedom to use your own ideas; the freedom to be the boss; the freedom not to be fired; and the freedom to earn as much as you want. The reality of small business ownership can be quite different. Many small business owners will tell you that they work more hours than when they worked for someone else.
The type of business that you enter should complement your experience, interest and/or technical knowledge. It is fine for you to dream about becoming your own boss some day, however, before you put too much work into your business, make sure that the area you choose is the right one for you.
Further information
Steps to Starting Your Own Business: setting up as a self employed sole trader is the simplest and quickest way to start a one person business, becoming self employed, employment vs. self employment. In the United Kingdom there are many different options for people looking for employment after school. While some may choose to work for an employer and a boss, others prefer to regulate their own work schedule and become self-employed. Business Small Starting: if an employee is considering the switch from being regularly employed to self-employed, there are a few things he or she must consider and know first. There is not much paperwork to do or registration fees to pay, record keeping and accounting is straightforward, and there are the benefits of being your own boss.
Find out the consequences - and the legal requirements - of setting up as a sole trader here, starting my own business. You will also find out how to meet your responsibilities for paying your own tax and national insurance. Finally, our checklist will help you make sure that you have put your business on a proper legal footing. Anyone can set up in business as a sole trader, although for certain types of work you may need a licence or permission from your local authority. Restaurants, childminders, taxi drivers and street traders, for example, all need to have a local authority licence. Your qualifications and business premises may be inspected beforehand to ensure you comply with regulations. If you run a business from home, you may have to pay business rates for the part of your home that you use for your business.
This mainly depends on whether the business area of your home is also used for domestic purposes. If you simply work on a computer in a bedroom, for example, you will probably not have to pay business rates, benefits and rights, how do me become self-employed and National Insurance contributions for self-employed. Income tax, national insurance contributions, value added tax, capital gains tax, inheritance tax, council tax, excise duties, car tax, stamp duty, airport duty, insurance premium tax. The list of taxes that we pay is virtually endless!
Starting Business Online: as a sole trader you will have to pay income tax on any profits from your business. You must fill in a self assessment tax return each year, detailing your income and expenses.
Make sure you register as self employed with HM Revenue & Customs as soon as you start up in business on your own, establishing a business. You will have to make flat rate Class 2 national insurance contributions (NICs) throughout the year (£2.10 a week). Setting up a monthly direct debit is a good way to ensure you pay in time. Setting up a business: VAT (value added tax) is a tax on sales of goods and services. VAT affects almost every business transaction. If your business has (or you expect it to have) a turnover of more than £60,000 a year, you must charge your customers VAT and send it to HM Revenue & Customs, start-up business UK.
Starting a business from scratch: do you have a long held ambition to run a business? Is it based on an idea you have had experience of, either through work, as a hobby, or from personal experience? Do you want to copy an idea that you have seen elsewhere, and think you have a market for it? Small Business start-up: you are far more likely to succeed if you have relevant previous experience or knowledge, rather than go in blindly.
Another avenue can be that of developing part time interests/hobbies, into a full time business. How to set up a business: it can be very useful and informative to view other businesses in the same area that you want to trade with, and talk with them, if possible (Usually in a different geographical area from that which you intend to operate, and for which you pose no threat); it is possible to gain a substantial amount of helpful information in this way. Planning and preparation is essential to the success of any business, and starting a new business has a higher risk of failure, than purchasing an existing one, becoming self employed and Vat registration, Opening a Small Business and Business License.
Starting Business UK: it can be very helpful if you have a partner/spouse who can continue in paid employment until you are able to build the business to a level where you can take out an income.
How to run a successful business, it is also extremely helpful to have a partner/spouse who can take a detached view of the business, and give you their observations. Starting a Home Business: it is very easy to spend long hours on/in the business, and for you to be unable to make objective decisions when you are tired or busy, home base business & different types of businesses. Free and independent business advice to anyone thinking about starting or running a small business in England, starting a Business online, open a new business and commerce - helping the business of today. Business Current Account is your best UK business bank account with an account opening guarantee and online internet banking.
Open an account today: offering presentations for a selection of UK based current & savings account products. Company formation UK, limited company formations & registration, electronically lodge online, forming a limited company online using Coddan secure Online Ordering facility is easy.
This package includes: Registration as a self-employed in 2-3 weeks Practical advice and guidance to help you get your business off the ground Initial consultation free-of-charge Preparation and submission of the appropriate forms to Inland Revenue to obtain National Insurance Number and PAYE Provision of specialised account books, seals and other stationeries (additional fee) Payment of legal and initiation fees The following documents will be posted to you (these documents will be sent via Royal Mail): Written confirmation letter from the Inland Revenue
Business Start-Up: Legal Requirements
When you start working for yourself, you will need to register as self-employed with the Inland Revenue. Once you are registered as self-employed, you will be a Self Assessment taxpayer. You can trade under your own name, eg John Doe, or use another business name, eg AAA Business Marketing. If you are self-employed, you are responsible for paying your own tax and National Insurance contributions. You will need to keep business records and details of your income so you can fill in an annual tax return. If your business turnover is more than the VAT threshold (£61,000 from 1 April 2006) you will normally have to register for VAT. You pay Class 2 NICs at a flat rate of £2.10 a week (2006-2007) if your earnings are above £4,465 per year. Bear in mind that Class 2 NICs do not count towards the additional State Pension, Statutory Sick Pay or Jobseeker's Allowance. Key dates for self-employed tax: 30 September: sending in your paper tax return if you want HMRC to work out how much tax you owe. 31 January: sending in your tax return to avoid a penalty. 31 January and the following 31 July: tax payments.
WAYS TO RUN A BUSINESS: BUSINESS SUPPORT, INFORMATION AND ADVICE
You are not alone if the thought of running your own business has crossed your mind. Even if your vision of a small business differs from your neighbor's, you probably dream have being your own boss and of providing a needed service or creating a cool new product.
However, your very first small-business decision may be to admit that you are not ready for this career - at least not yet. If you are straddling the fence, Coddan CPM will uncover whether this career works for you. You will also gain insight into getting your personal finances in order before exposing yourself to the risk of a new business, and discover how to draw a roadmap to reach your career destination. This easy-to-understand guide is also for those who want to start a new business.
To start a business you will need to choose or create a business plan. While this is an obvious step many people who want their own business don't have an idea, just the desire to be an entrepreneur. For the budding entrepreneur, there are many options; buying a franchise or an existing business, or looking to others for ideas for a start-up business. Once you have decided on the business you wish to start, then the real work begins. The simplest form of business entity is the sole proprietorship. If you choose this legal structure, then legally speaking you and the business are the same. Establishing a sole proprietorship is cheap and relatively uncomplicated.
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We also answer your business questions by running a website and a telephone call handling centre (between 9:30 AM and 17:30 PM, except holidays): 0800 081 1510 or +44 (0) 207 637 3881, fax: +44 20 7681 3318. We may answer your questions at our main office in central London (W1, 5 Percy Street) - free of charge for first-time business starter entrepreneurs. Our consultants and business start-up advisors speak English, Spanish, Italian, and Russian. Please do not hesitate to contact us directly and apply for a meeting with us if you have any questions. We see too many investors who might have avoided trouble and losses if they had asked basic questions from the start. If you would like to arrange a meeting to discuss how to start your own business, tips on funding, employing people and the biggest causes of failure for start-ups, please contact us.
It does not matter if you are a beginner (small or new business start-up questions - your first knowledge search answers are free of charge!) or have been investing for many years (professional questions about tax planning, business planning, tax optimisation cannot be answered free of charge); it is never too early or too late to start asking questions. It is almost impossible to ask a dumb question about how you are investing your money. Do not feel intimidated. Coddan CPM offers assistance and resources for those running or starting a business in England, Scotland, Northern Ireland or Republic of Ireland. Coddan CPM also offers business-planning, companies incorporation, accounting and consulting services in USA and offshore countries.
Start a Business in England, Scotland or Ireland, small business advice, business planning in London (UK), Edinburgh (Scotland), Belfast (Northern Ireland) or Dublin (Republic of Ireland). Setting up and running a business is a time consuming task - you need to be dedicated and focused and able to structure your time in order to be successful. The rewards of starting up your own business can be great, but think carefully if you have the attributes and right sort of personality to cope with going it alone.
Setting up a small business involves a number of important steps if you want to get things right first time. There will always be an element of trial and error in starting up a business; however we hope this overview will guide you through the initial steps, based on the experiences of the Coddan CPM team and our contributors.
Of the four million businesses in the UK, over 99% are 'small' (0-49 employees), according to government data. At the start of 2003, 46.2 per cent of business employment was in small businesses. Even more interesting is the fact that 2.9 million of these small businesses have no employees at all - the majority of small businesses are operated by individuals, or by a small group of people. Small and medium-sized enterprises (SMEs) together accounted for more than half of the employment (58.2 per cent) and turnover (52.4 per cent) in the UK. In the UK today, over 2.5m businesses are sole proprietors, around a million are limited companies, while some 540,000 are partnerships. But which is best for you?
CHOOSING THE BEST OWNERSHIP STRUCTURE FOR YOUR BUSINESS: SOLE TRADER (SELF-EMPLOYED)
You should think carefully about which structure suits your particular circumstances before making a decision. Choosing the wrong structure could expose you to unnecessary costs and risks, while failure to address certain practical issues may result in you falling out with your business partners or associates. Having said that, the status of sole trader suits many professions where starting up does not require major investment, and where a skill - such as carpentry, bricklaying or freelance services - is just as important as business acumen. It will not stop you from employing people when you start to get busy, but it will allow you to keep a tight grip on your business and to run it as you wish.
Today, there are several business entity options available for entrepreneurs. Like anything else, each of them has advantages and drawbacks:
Sole Traders:
General Advantages of UK Private Limited Companies:
1. Liability is, in the vast majority of cases, strictly limited to the investments made by the shareholders. 2. Company Officers are not personally liable for their actions unless there is a clear and serious breach of their fiduciary duty. 3. Limited companies often benefit from greater prestige than their sole proprietorship or partnership counterparts. The reason is because such an enterprise normally requires more planning and thus is deemed more credible. 4. Limited companies often benefit from significant tax advantages. In fact, many countries around the world give exclusive tax incentives to this type of entity. 5. The rights of shareholders are normally clearly defined and protected. 6. Corporate taxes only become payable after the end of the financial year. This means money that would otherwise be taxed on a monthly or quarterly basis, is available to earn further interest before the final payment of tax. 7. You need only appoint one Director and one Shareholder. 8. Directors can be corporate bodies or private individuals. 9. A Director can be of any nationality. 10. All companies must appoint a company Secretary who can be of any nationality.
Most people who start in business do so as sole traders. They work on their own. They alone receive the income and are liable for any debts. The financial costs of starting up are minimised by working alone from home. It can be a lonely life but, instead of colleagues, you have customers. Business people who work in the same town often join organisations such as the British Chambers of Commerce or networking groups such as Business Network International where they meet other people who are in a very similar situation to themselves. Talking your problems over with other people in business, provided that they are not competitors, can help.
Being a sole trader is the simplest way to get started in business (although not necessarily the best, you need to get professional advice before taking the plunge). Once you have informed the government agencies of your intentions to go self-employed, you can start trading right away (subject to any specific licences you might require in your line of work).
As a sole trader, you can quickly adapt to changes in your business with minimal bureaucratic changes required and you have complete control over your business and accounting affairs. However, a sole trader is also ultimately responsible for any liabilities should anything go wrong. It is worth spending time considering which set-up company format is best for you. As a sole trader, you will not need to notify Companies House, nor deal with any administrative or accounting requirements which are required of Limited Companies. If you start working for yourself, you must register with the Inland Revenue as self-employed, even if you already send in a tax return. There are some exceptions and special rules for particular industries, like the construction industry.
Essentially, your business income is counted alongside your existing personal income, so the accounting side of your business will be very straightforward. As the name suggests, you will be personally liable for any debts you incur in the running of your business which you wouldn't be under the Limited Company route. In terms of accounting, you will need to submit an annual self assessment form to the Inland Revenue and keep accurate and up-to-date records of all business transactions and accounts. You will also be pay income tax on all profits and pay national insurance contributions on those profits. Losses can be offset against tax on other income. In the April after your business starts, the Inland Revenue will send you a Self Assessment tax return to fill in. The Revenue will also use the return to assess any profit-related (Class 4) NI contributions you may need to pay.
Self-Employed people are also liable for Class 2 NI contributions (currently £2.05 per week). If your income from self-employment is low (below £4,215 in the tax year 2004-05), you may be able to apply for the Small Earnings Exception. Also, if you're already paying NI contributions in another job, you may be able to defer paying your Class 2 contributions until the end of the tax year.
Even though you will have registered as "self employed" when setting up, you won't automatically be VAT registered. You do not usually need to register for VAT until your turnover reaches a certain limit in any 12 months, or you expect it to do so. This limit - the 'VAT threshold' - is currently £61,000. Your annual turnover is normally the total amount of money coming into your business from the goods or services you sell. You can read our Complete Guide to VAT.
Self-Employed Advantages: Easiest and least expensive form of ownership to organize Flexibility - no requirement for registration or filing documents Fewer statutory controls Lower National Insurance costs Tax payable is Income Tax paid in two instalments. Coddan CPM can help you and advise on your self assessment tax return Profits can be withdrawn at any time without PAYE problems.
Self-Employed Disadvantages: The sole trader is the business. On the death of the sole trader, the business effectively ceases Unlimited liability: the sole trader is liable for all debts of the business May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans Fewer State benefits and tax reliefs are available Weak structure There are certain businesses that will not use Sole Traders, particularly if you are a contractor Tax and National Insurance is deducted directly from your profits for the year and there is less scope for tax planning as with a Limited Company
Being a sole trader will suit a large number of small business people, however it is not always the best route which is why we suggest discussing your choices with an accountant or other adviser. The limited company route limits the personal liability of its directors if something goes wrong, whereas the sole trader is ultimately personally liable for any losses the business makes, of if you are forced into bankruptcy. In addition, in some areas of business, having a limited company setup will enhance prestige and provide a more professional appearance in certain industries.
Before you start trading you will have to decide under which structure you intend to trade. This will be dependent on the type of business you are running and how you intend to develop in the future. We have several guides and calculators that can help you through this process. Alternatively you can make an appointment with one of our consultants.
Everyone starting out on their own needs to register with HM Revenue & Customs. It's quick, it's painless and it can definitely save you time and money. You must do this as soon as you start or within the first three months, even if you already use a Self Assessment tax return. There are penalties for not registering, so fill in the form at the back of this leaflet and send it to us right away. In addition, if you are unemployed now, do not forget to tell the Jobcentre. For More Information About Being Self-Employed:Contact Us Online or call us at (+44) 0207 637 3881. To speak with a representative, please call between 9:30 am and 17:30 pm any business day.
Do I need an Accountant? Yes. An accountant will prepare your accounts in a way that is acceptable to the taxman, and will ensure that you are charged the right amount of tax. But don't wait until the end of your first year of trading before finding one. An accountant can give you valuable help in setting up your bookkeeping system; if you keep your records in the form suggested by your accountant it will make his job in preparing your accounts easier and therefore cheaper. He will also be able to help you to prepare budgets and cash flow forecasts, which your bank manager will want to see.
If you are self employed you will have to complete a self assessment tax return and pay over the first instalment of your tax liability to the Inland Revenue by 31 January each year. Coddan CPM can complete your self assessment and prepare your company accounts: self assessment only - from £125.00 (depending on the complexity of your return). Self Assessment Tax Return and Accounts preparation - from £300.00 (depending on the complexity of your return). For More Information About Accounting and Bookkeeping, Please Click:PAYE, VAT & Accounting and Bookkeeping Service
You can read more on our site about the Limited Company route and for general taxation guides, please try our dedicated the tax section. You should register the moment you start out as a sole trader; otherwise, you will incur a penalty of £100.00 if you do not register within three months. When you start working for yourself, you will need to register as self-employed with the Inland Revenue - we may do it for you! If You Are Thinking About Becoming Self-Employed:E-mail Your Questions to Us
Do I Need a Visa for the UK to Start a Business in England, Wales, Scotland or Ireland? The United Kingdom is the home of Europe's largest city and is embedded in the culture, vocabulary and dreams of English speakers worldwide. It is seen as an economic hub for trade between Europe and North America with the United Kingdom benefiting from the situation for centuries. The United Kingdom still has one of the strongest economies in the world today. The United Kingdom has a population of diverse backgrounds, given the variety of people who have settled here over the centuries. The majority of the population is Anglo-Saxon which is predominantly German-Scandinavian in origin. Since the middle of last century there has been significant immigration from many ex-colonies, especially the Caribbean, Pakistan and India. The United Kingdom has a positive view on increasing the multicultural population of the country with the amount of people immigrating to the United Kingdom increasing every year. The UK is in the process of liberalising its immigration laws and has a generally open and positive approach concerning those who wish to enter the country to work or set up a business.
British Citizens, those with Right of Abode or settled in the UK and nationals of European Economic Area countries (see Appendixes for a list of these countries) are permitted to live and work freely in the UK. All others can apply to enter the UK to work or set up in business. Nationals of certain countries, known as visa nationals, require a visa or prior entry clearance to enter the UK for any reason. Others require prior entry clearance, depending on the reason for coming to the UK. Entry clearance must be applied for at the British Embassy, High Commission or other British Diplomatic Mission which issues visas in the country where the applicant is normally and legally resident. Where there is no such post the applicant must apply to the appropriate designated post outside the country or territory where they are living. An applicant for entry clearance must be outside the United Kingdom and Islands at the time of the application.
Work Permits: A UK Work Permit is a document issued by Work Permits (UK) of the Home Office Immigration and Nationality Directorate. It gives an employer permission to employ you in a specific job at a specific location. A Work Permit is authority to take employment, but does not grant leave to enter the UK. A Work Permit holder must apply to an immigration officer for leave to enter at a UK port of arrival. A visa national must apply for a visa before travelling to the UK.
Any non-EEA national subject to immigration control who wishes to come to the UK to work must, with limited exceptions, have a Work Permit. The length of time taken to process a Work Permit application depends on the nature of the application but, as a general rule, employers should allow at least six to eight weeks. Work Permit applications should be made by the UK employer and a permit obtained before the overseas national concerned arrives in the UK. If a person arrives in the UK without a Work Permit, they will normally be refused entry. How Do I Apply? Do I Need a UK Visa?
CHOOSING THE BEST OWNERSHIP STRUCTURE FOR YOUR BUSINESS: PARTNERSHIPS
You could set up in business with a colleague or friend. Perhaps you each have different skills to bring to the enterprise. One may be a good sales person and negotiator while another has the ability to provide a service, like mending guitars, writing websites, compiling accounts, analysing markets or sculpting. When you go into business with someone else, this is usually known as a 'partnership'. Everyone might own an equal share or some may have a larger proportion of the business than others. In a partnership, you are liable for the debts of the business in proportion to how much of it is yours and your income may be of a similar proportion.
Unlike other business formats, partnerships (and sole traders) can start trading straight away, although certain types of businesses may need a licence to trade. If trading under a name other than that of the owners, must display names of owners and an address, for each, at which documents can be served. Behind sole-traders, a partnership is the second most popular type of business and is more commonly associated with professional services such as accountants, solicitors and doctors. It is also common in partnerships for each partner to specialise in a specific area of the business. For example, in an accountancy service, one partner may specialise in bookkeeping, another partner may specialise in financial advice, and so on…
You have to be aware that because any decisions and actions are dependent on the other partners agreeing, certain conflicts may arise from time to time. Such conflicts have led to partnerships failing and so it is important that some control can be maintained by compiling a 'partnership agreement' prior to starting the business. This agreement will be outlined later in the article.
Types of Partnerships: The General Partnership The General Partnership, which is the scenario outlined above and is subject to The Partnership Act, 1890. Full partnerships, as outlined above, have between two and twenty partners, but more commonly, the number of partners in a full partnership lies between two and four inclusive.
An arrangement in which two or more individuals or other persons (such as a company and an individual) conduct business as partners, whether officially or not. In terms of asset protection, general partnerships can be even worse than sole proprietorships. Anything that one partner does affects all of the partners, because each partner of the general partnership is personally responsible for all obligations of the partnership deals. Thus, each general partner's exposure to risk is increased by a factor equal to the number of general partners in the business.
The Limited Partnership: The Limited Partnership, which is subject to The Limited Partnership Act, 1907. Limited partnerships they are very rare today and account for less than 1% of all partnerships in the UK. A limited partnership is formed when one or more of the partners invest capital into the business but do not participate in running and managing the business. These partners therefore have limited liability as they can only lose the amount of money that they initially invested into the business.
A Limited Partnership (LP) is an association of one or more general partners together with one or more limited partners to conduct business for profit as co-owners. The most important feature of a LP is that the limited partner enjoys limited liability as long as s/he does not participate in the control of the partnership business. The general partners of the LP are the ones who are responsible for the obligations of the LP.
In a limited partnership, it is the general partner who remains liable for the debts and obligations of the entity. For larger risk exposure, a company (corporation) may be formed to serve as the general partner. A corporate general partner is protected from direct attack by a judgment creditor because the ultimate liability for the debts and obligations rests with the shareholders. By spreading share ownership, individual exposure is considerably reduced. Even without a corporate general partner, risk can be spread by distribution of limited partnership shares. If a judgment creditor obtains a charging order against one partner, the order goes to that partner's share in distributions from the partnership, and not to the entire business.
Limited Liability Partnership (LLP): An LLP is similar in some ways to a standard Partnership, except that the individual members have lower liabilities to any debts which may arise from running the business. There are more administrative duties involved compared to the Partnership business structure. In fact, an LLP is more similar to operating a Limited Company. In terms of liability, the Limited Liability Partnership is itself liable for debts run up in running the business, rather that the individual members of the LLP. As a result, LLP's are only recommended for profit running businesses.
An LLP may be formed by two or more persons (individuals or companies, and not necessarily UK resident) to carry-on a trade or business. To form an LLP, the partners have to file an incorporation document at Companies House. The owners and managers of an LLP are the same. The management structure and relationship between the partners are a matter for agreement between them and may be recorded in a separate LLP Agreement, similar to a Partnership Agreement.
LLP Advantages: No personal liability on a member for the LLP's debts and contracts No joint and several liability for the negligence of any member As a separate legal entity, LLP's may own property, sue, and be sued in LLP's name Members' liability to contribute in a winding-up is limited to the amount they agree to contribute in the event of a winding-up as recorded in the LLP agreement.
LLP Disadvantages: Disclosure: information (in particular accounts and an auditors' report) m
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Registration as a self-employed in 2-3 weeks
However, your very first small-business decision may be to admit that you are not ready for this career - at least not yet. If you are straddling the fence, Coddan CPM will uncover whether this career works for you. You will also gain insight into getting your personal finances in order before exposing yourself to the risk of a new business, and discover how to draw a roadmap to reach your career destination. This easy-to-understand guide is also for those who want to start a new business. 
You should think carefully about which structure suits your particular circumstances before making a decision. Choosing the wrong structure could expose you to unnecessary costs and risks, while failure to address certain practical issues may result in you falling out with your business partners or associates. Having said that, the status of sole trader suits many professions where starting up does not require major investment, and where a skill - such as carpentry, bricklaying or freelance services - is just as important as business acumen. It will not stop you from employing people when you start to get busy, but it will allow you to keep a tight grip on your business and to run it as you wish. 
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Easiest and least expensive form of ownership to organize 
