We are a firm of Chartered Accountants in Southampton offering key advice on business startup.
It is the ambition of many people to run their own business. Some may have been made redundant and find themselves with free time and financial resources. Others make the decision to start up in business to be more independent and obtain the full financial reward for their efforts.
Whatever the reason, a number of dangers exist. Probably the greatest concern is the possibility of business failure.
Read on for guidance on some of the factors which need to be considered before trading begins.
This fact-sheet cannot cater for every possibility and any decisions should be supported by professional advice.
Initial Considerations
In order to make your business a success there are a number of key factors which should be considered:
commitment- starting a business is demanding. Determination and enthusiasm are essential
skills- you will need managerial, financial, technical and marketing skills. If you do not have these skills personally, they can be found in a partner or employee, or acquired through training
your product or service should have a proven or tested market, but must not conflict with the patent or rights of an existing business.
In addition to these general considerations there are a number of more specific matters.
Taxation
When starting in business, taxation aspects must be considered. Power Accountax are Chartered Accountants in Southampton , offering key taxation advice.
Taxation on profits
The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.
National insurance (NI)
The rates of NI contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. But in a company, it may be possible to avoid NI by paying dividends rather than salary.
Value added tax (VAT)
Correctly accounting for VAT is an essential part of any business and neglect may result in a significant loss.
When starting a business you should consider the need to register for VAT. As Chartered Accountants in Southampton we can help register you for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register.
Expect a visit from HMRC within eighteen months of registration. This inspection of your records ensures VAT is being properly accounted for.
Employing others
For the business to get off the ground or to enable expansion, it may be necessary to employ staff.
It is the employer's responsibility to deduct income tax and national insurance and to account for student loan deductions. The balance must then be paid over to HMRC. Payroll records should be carefully maintained.
You will also need to be familiar with employment law.
Premises
There are many pitfalls to be avoided in choosing a property. Consideration should be given to the following:
suitability for the purpose
compliance with legal regulations
local by laws
physical restrictions such as access.
Insurance
Comprehensive insurance for business motor vehicles and employer's liability insurance are a legal requirement. Other types of insurance such as public liability, consequential loss, business assets, Keyman and bad debts should be considered.
Pensions
Putting money into a pension scheme can be a very attractive way of saving for retirement because of the favourable tax rules. Many companies have to provide access for their employees to a stakeholder pension.
How We Can Help
As Chartered Accountants in Southampton whilst some generalisation has been made by us about starting up a business by us, it is always necessary to tailor the strategy to fit your situation. Any plan must take account of your circumstances and aspirations.
Whilst business success can never be guaranteed, professional chartered accountants advice can help to avoid some of the problems which befall new businesses. We would welcome the opportunity to assist you in formulating a strategy suitable for your own requirements. We can also provide key services such as bookkeeping, management accounts, VAT return and payroll preparation at an early stage.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm
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