Top-Rated Business Start-Up Accountants in London
The ultimate guide to setting up a successful small business
Business is all about profits and cash is king. If you don't have a plan, you will blow your budget to pieces and your business WILL fail. Follow this guide so you don't become a statistic. Remember, the numbers never lie!
1. Make a business plan
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The Princes Trust website is a fantastic resource. There a number of factors to think about but the key considerations are:
Customers
Who is your ideal customer? Understand their needs and how you will target them. You will need a marketing plan.
Products/Services
Be clear on what you are selling. What makes the product/service unique? Put a marketing strategy in place.
Competitors
Know who your competitors are. What are the market leaders doing well? What are they doing badly? Don't price yourself out the market.
Profit forecasts
Put together an analysis of your projected sales and costs.The numbers never lie!
2. Pick a legal structure
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The structure depends on the nature of your business, tax efficiencies, start-up capital, growth plans and exit plans.
3. Accounting software
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Notepads, invoice books and spreadsheets are fast becoming a thing of the past. Cloud technology allows you send an invoice to your customer or pay a supplier using your phone. What is more, you can download all your bank transactions directly to your accounting software. The market leaders are Xero and Sage Cloud and we are accredited by both!
4 - Opening a business bank account
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Key things to consider:
Monthly fees
Look for special offers and don't waste money paying a monthly fee for silly gimmicks you will never use.
Charges
Banks make money by charging businesses for "transactions". Make sure your pick the bank that charges your the least amount of money.
Helpdesk
Pick an online bank who will respond to you quickly. You don't want to waste 3 hours queuing at a bank!
5 - Hiring staff
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Freelancers
Freelancers are bought in for a task or project, such as setting up a venue for an art exhibition. You do not need to account for tax on these payments. If this becomes a regular occurrence, HMRC could argue they are employees and slap you with a huge tax bill.
Employment rights
Employees are protected by law and have rights. The rights include minimum wage, minumum days of paid holiday, protect against unlawful discrimination to name a few. Break the rules and you will end up in an employment tribunal.
6 - Taxation
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Tax is a cash cost to your business. It impacts every business decision you take. The landscape for "tax avoidance" has changed and this is no longer possible. There are still a number of tax planning opportunities available but tax compliance is unfortunately a necessary evil.
VAT
If sales exceed £85k in a 12 month period you must register for VAT and charge 20% when you sell goods/services.
PAYE
You must deduct tax when you pay an employee. In addition, you have to pay around 15% tax known as "employers national insurance"
Corporation tax
Tax paid on your business profits. That is, total income less total costs. Not all expenses are deductible. The current tax rate is 19%.
Income tax
Tax when you pay yourself. Most small businesses pay themselves a dividend. The rate of tax typically ranges from 7.5% to 38%.
7 - Year end
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Congratulations! you have made it through to the year end. This is an exciting time because you can finally reward yourself with a bonus for all your hard work. There are a few matters to think about first!
Year end accounts
Time to prepare accounts and work out how much profits you made in the year. Don't have an accounting degree? Don't worry, we do!
Dividends/bonus
Pay yourself a bonus. Well done, you deserve it!
Future planning
It is time to plan for next year!
1) Where do you want to be?
2) Where are you now?
3) How will you get there?
Contact for a free consultation or to get a feel of prices, get an instant quote!
