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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. The guide won't make you a millionaire but it will make sure you stay on top of the numbers!

1. Make a business plan

The Princes Trust website is a fantastic resource. There a number of factors to think about but the key considerations are:


Who is your ideal customer? Understand their needs and how you will target them. You will need a marketing plan.


Be clear on what you are selling. What makes the product/service unique? Put a marketing strategy in place.


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

There is a method to this and it the structure depends entirely on the nature of your business, tax efficiencies, start-up capital, growth plans and exit plans.

3. Accounting software

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. Ultimately, they all do the same thing (the concept of debits and credits has never and will never change) The market leaders are Xero and Sage Cloud and we are accredited by both!

4 - Opening a business bank account

Key things to consider when choosing a business bank are:

Monthly fees

Look for special offers and don't waste money paying a monthly fee for silly gimmicks you will never use.


Business accounts tend to charge for "transactions". Make sure your pick the bank that charges your the least amount of money.


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


If you hire someone in do a particular job and are pay them for their expertise and skills for a specific task, such as setting up a venue for an art exhibition, they can simply invoice you for their services. You do not need to account for tax on this payment. If this becomes a regular occurrence, they will become a grey are in the eyes of HMRC.

Employment rights

Many small businesses hire staff on a temporary basis. These staff might think they are "self-employed" but you need to consider if they are employees. If they are, you must deduct tax on their wages offer staff certain rights such as minimum wage, paid holiday, protect against unlawful discrimination.

6 - Taxation

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.

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If sales exceed £85k in a 12 month period you must register for VAT and charge 20% when you sell goods/services.


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

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

It is time to prepare accounts and work out how much profits you made in the year. Don't do this yourself, get Lancing Cotswold Accountants and Tax Advisers to do it!


It is time to pay yourself a bonus. Well done, you deserve it!

Future planning

It is time to plan for next year! What went well, what didn't go so well. 3 key questions:
1) Where do you want to be?
2) Where are you now?
3) How will you get there?

Business Start-Ups Accountants

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