Starting a company today is more complicated than ever before but don’t let the legal minefield put you off. With the right information you can start preparing to launch your company today. In an economic downturn may be the best time to start a business, competition drops and office space, stock and advertising all become cheaper.
This brief guide will help you answer some basic questions about how to begin. You should take note of any issues you have issues with, but it would be highly advisable to discuss your plans with a business law solicitor before you begin to take serious steps towards starting your company.
What are the different types of company?
• A Limited Company is a company that is legally separated from its shareholders and investors. This means that a Limited company is legally liable for any debts.
• A Franchise is a company in which you sign a contract with a franchiser who will assist you with your business model.
• A Partnership is a company in which two or more people set up a company together and become jointly liable for any debts.
• You also have the option to remain self employed.
Perhaps the most important thing to understand is the importance of record keeping; it is worth beginning this immediately to ensure you always use best practice. Record keeping is a legal requirement and will help keep you out of trouble with the tax man.
The next thing to do is to write a business plan. This is essential both to organise your thoughts and if you require investment. The business plan should begin by describing what your business is going to do. It should detail your objectives, your strategies and it should contain an analysis of the market and a financial forecast of your predicted figures.
One of your biggest burdens is likely to be tax. Below is a list of the different taxes you will be required to observe. It is worth hiring an accountant to advise you on your strategy before you begin to action your plan.
Tax will need to be paid on all taxable profits at a minimum rate of 20%.
VAT is charged on most business to business transactions as well as business to individual transactions. VAT only needs to be paid by companies turning over more than £73000
It is your responsibility to pay “pay as you earn” tax on any salaries you pay your employees.
Another major hurdle will be obtaining the initial funding for your business. It is worth asking a solicitor to advise you on whether you would be best placed to risk your own estate on the investment or whether you should approach investors.
If your business is particularly unique, you may also be interested in researching crowd funding options where minor investors can pledge funds that are held in escrow until a target is reached, at which point the investors either become stakeholders or receive other benefits, such as a free version of your product.