Starting a small business requires determination, motivation and know-how.
here is an endless amount of information available on the internet which will give information and advice on business start-ups.
Firstly a business plan must be generated.
Developing a business plan will force you to think through some important issues that you may not otherwise consider. Your plan will become a valuable tool as you set out to raise money for your business, and it will provide milestones to gauge your success. To do this successfully a lot of thought must go into this including information on how your idea is going to succeed and how much money will be required to set up and sustain the company
Inevitably, the first hurdle which you will contemplate will be how to finance your start up idea. In order to get the best option you will need to shop around to see what finance is available to you. This could be via funds from investors, a bank loan or you may be able to borrow money from friends or family. Which ever method pf finance you choose be sure that you can afford the repayments and that you understand the cash flow.
Ultimately, when it comes to tax all the Inland Revenue is interested in is your income. You and your accountant however, have two concerns: your income and how much you spend to get that income.
Fortunately, the information for income and expenses can be reliably tracked by the fairly simple method of book-keeping. As it is likely there will be many different types of expenses repeated over time, it is best to divide a page either on a spreadsheet or a paper page, into several different columns each with different sub headings for example office stationary, travel and telephone bills. Along side this you should keep all invoices as you accountant or tax office may ask for these at any time.
You must register your business for VAT if you supplied taxable goods and services amounting to more than the prevailing threshold (see: www.hmrc.gov.uk) in the last 12-month period, or if you anticipate supplying taxable goods and services amounting to more than £61,000 in the next 30-day period alone.
If you register, you will need to charge VAT on your income, but you can recover VAT on your purchases.
Goods and services such as insurance, loans or some types if education and training are not taxable and therefore are exempt from VAT.
Different types of National Insurance contributions (NICs) are calculated and collected in different ways.
Class 1 NICs show that employers are responsible for calculating, deducting and paying NICs to HM Revenue and Customs on behalf of all employees.
Class 1A show that the employers must calculate and pay NICs due on taxable benefits given to employees such as company cars and health insurance. These must be declared on form P11D annually and a copy given to the relevant employee.
Class 1B is only paid by employers who have a PAYE Settlement Agreement with HMRC. Class 3 is paid voluntarily by the individuals who wish to protect their right to certain benefits.
For all companies, there are regular administrative tasks that need to be completed to keep information at Companies House up to date.
There are various types of formal meeting that a company needs to consider, with different notice periods and responsibilities.
- Annual General Meetings (AGMs) - limited companies must give its members and accountants 21 days notice.
- Other meetings - for limited companies the notice period is 14 days. For unlimited companies, it is seven days.
When important decisions have been taken at meetings, Companies House has to be notified within 15 days. You can read the rules about company resolutions on the Companies House website.
Minutes must be kept of directors and general meetings. These tasks are usually carried out by the company secretary.
Companies must keep official records ("registers") of:
- shareholders and the shares they own
- directors and secretaries
- directors other commercial interests
- loans or other obligations that affect the companys financial health
- who, other than the registered owner, has an "interest" in the shares - if its a public company
Planning is the key to any business throughout its existence. To be successful, there must be regular reviews of your business plan. Its sensible to review current performance on a regular basis and identify the most likely strategies for growth.
You can use benchmarking to see how the different areas of your business performance compare with that of your competitors. This will help you identify potential improvements to your business processes and opportunities for growth.
Once youve reviewed your progress and identified the key growth areas that you want to target, its time to revisit your business plan and make it a road map to the next stages for your business.
Cranleys Chartered Accountants
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