starting a New business
If you are Starting a New business we have broken down the steps to consider before doing so.
Market Research
As a new business you need to figure out who is going to buy from you (Customer Research) and who you have to beat (competitor Analysis).
Customer Research:
- Build better products and services
- Understand purchasing decisions
- Understand demographics and interests
- Find your market size
Competitor Research:
- Find your leading competitors
- Find what they do well
- Work out what you can do better Look for USP’s of your idea
- Analyse competitor strategies
Business Plan
What to include in your business plan:
- Value Proposition
- Market Problem
- Your Solution
- Target Market
- Competition
- Funding
- Sales
- Marketing
- Budgets
- Milestones
- Staff
- Partners
Budget & Forecasts
A budget helps a business predict how much money will come and go, usually over a year. This helps you to see if you can afford to start a business and if you can make a return.
The purpose of a budget:
- How much will it cost
- Do you need to borrow money
- Breakeven Point
- Can you afford staff
- The price of your product/service
Pricing
The price can influence the number of sales you make and the profit of your business.
To ensure you make more money out of a sale than you put in you need to make sure you understand your costs.
Costs are split into two groups
Cost of Goods Sold – These are directly related to sales and occur only when a product or service is provided. As sales increase these costs increase.
Overheads – These are the costs that are incurred by the business irrespective of the number of sales. They are referred to as fixed costs and do not fluctuate in relation to sales.
Choosing a business structure
Sole Trader:
Advantages: It is easy to set up and tax is relatively straightforward. You simply declare details of your earnings from self-employment within on your Self-Assessment personal tax return form.
Disadvantages: With no legal status a sole trader is personally responsible for the business, meaning if a business gets into debt, so does the owner.
Partnership:
Advantages: It is easy to set up although it may be a good idea to draw up a partnership agreement outlining the details of the partnership at the outset. Tax for a partnership still falls within Self-
Assessment but the partnership must submit its own tax return as well as the partners declaring their earnings from the partnership in their Self- Assessment tax returns.
Disadvantages: Like a sole trader if the business gets into trouble so do the owners and may also face difficulties if the other partner does something wrong or the partners fall out.
Company:
Advantages: A company is a legal entity in its own right which gives the owners legal and financial protection. The income of the company is taxed at Corporation Tax rates which may be lower than income tax rates. There is greater scope for tax planning within a company structure.
Disadvantages: It will cost more money to function as a company as the accounting and tax requirements are more complex. You will need to prepare Statutory accounts and a Corporation tax return for the company submit these to HMRC and Companies House. Company directors will most likely also need to complete a personal Self-Assessment tax return too.
Startup Accounting
1) Keep Records of transactions (Bookkeeping)
Up to date information will tell you:
- If you are profitable or not
- If you have enough cash to pay upcoming expenses
- All required information to do tax returns (for yourself or an accountant)
The best way is to use cloud accounting software such as Xero or QuickBooks Online to make this easier and give you up to date information about the business.
2) Creating accounting reports
Weekly Checks: Sales, Profit, Wages, Money Owed, Upcoming Expenses
Monthly Checks: Budgets vs Actuals, Liabilities, COGS, Year vs Year
3) Dealing with taxes
- Income tax
- VAT
- Sales Tax
- Employee Related Taxes- PAYE & National Insurance
Lower you business related tax with specialist knowledge from your accountant.
Register your business
How to register a business?
To set up as a sole trader or partnership visit HMRC’s website at www.gov.uk..
A limited company can be registered on Companies House website and this includes registering for Corporation tax.
There are many guides and support for new businesses on the UK Governments website including:
- Taxes including VAT, CIS, PAYE
- Permits & Licences
- Employment Of Staff
Creating a website
Elements to create a quality website:
- Relevance- Understand you audience and what they are looking for. Professional- Clean and tidy
- Trustworthy- Contact details and accreditations
- Easy to find- Visible on search rankings
- Social Proof-
- Testimonials & Case studies
- Call to actions- Tell them what to do next
- User experience- Easy to navigate and purchase from.
Get extra support
Starting a business is not easy so having support around you is important. Here are places to go for extra support:
- Government Support
- Local Accountant
- Business Groups
- Local Organisations
- Marketing Expert
If you would like to download a comprehensive guide to starting a business click the link below.
If you would like to get in touch for some personal advice click here.
