Company formation can be cheap and you shouldn’t have any trouble getting set up. We’ve written 9 top tips to help you with the formation of your new business.
I have previously spoken about top tips for those who are interested in starting their own business. You can read that article, Top 5 business tips (for Startups) here. Although those tips are focused around new startups you may still be wondering about the initial phases of company formation and you may it find it surprisingly easy. So let’s get started.
1.Contact HMRC
If you are a UK business, your first point of call is to get set-up with HMRC. Signing up with HMRC (Her Majesty’s Revenue and Customs) is a necessary step to let the British government know that you; want a personal tax account, are an individual who needs to send a Self Assessment tax return or that you want to set up a limited company or other organisation that, by law, needs to pay tax. By signing into the .gov website you will be able to access additional information and register yourself as a UK business.
It’s also a good idea to complete HMRC’s free online training course that will give you great advice on record-keeping and filling in and filing your tax-returns.
The site will also offer you advice if you are planning on taking on employees as there is additional law surrounding employment, that must be followed if you want to avoid being penalised.
https://www.gov.uk/log-in-register-hmrc-online-services/register
This formation process is known as incorporation.
2. Get insured
Insurance can be a costly minefield, but it’s wise to get this set-up. There are a number of business out there that sell insurance and most of them will provide you with a free consultation or advice on which kinds of insurance you should get for your business.
When starting a business you will want to keep things lean and spend as little as possible so there is no need to rush this step. Shop around and find the best deal, either have a look around different sites manually or use a price comparison website to find yourself the best deal.
If you are interested to know what kinds of insurance you might need then check out the link below. Axa offers a great tool for doing this.
http://www.axa.co.uk/insurance/business/business-insurance-wizard/
3. Get a business name
This is the fun part. You may already have a name for your business, but you will need to check the name is free and then register it. Go to Companies House to see if the name you have chosen is available. Once you know it’s available it’s time to register at companies house. You can do this yourself but if you are unsure with the procedure then we will be happy to do this for you!
Check out our registered office address and company formation services.
4. Get a business bank account
Getting a business bank account can be essential to your startup. You will want a way of managing your finances that is separate to your personal accounts.
There are a number of reasons you may want to use a business account.
Most banks will offer you some form a consulting to help you with invoicing, grants and forms or short-term and long-term borrowing.
Where business and personal accounts differ, is generally to do with transaction fees. As such, it would be best to consult with your bank branch, or the bank that you intend to open an account with, to see which type of account may suit your personal and business needs. Handling a lot of cash and cheques may persuade your bank manager to give you a business account.
As a sole trade you may find there is no use in setting up your own business account. Many freelancers will have checks or BACS payments going to there accounts and opening a business account could be expensive and be more trouble than it’s worth.
As with any type of new deal it always best to shop around so go ahead and visit a price comparison site, such as Moneysupermarket.com.
Setting up a business account is the first step to managing your company’s finances however, you may require the help of an account to get up and running with other legal requirements such as VAT registration and corporate tax registration.
5. Educate yourself on compliance law
Make sure you educate yourself on the As to Zs of running a LTD company. If you live in the UK take the time to visit the government website here: https://www.gov.uk/browse/business/limited-company
There are number of tips from FAQs listed here, such as audit exemption for private limited companies, company tax returns and corporation tax.
Wikipedia defines compliance as the means to conforming to a rule. These may include, standard, law, policy and specification.
A term you may also hear is regulatory compliance. This refers to a goal that a company should take steps to achieving. For example, ensuring that they are aware of and take steps to comply with relevant laws and regulations.
6. Hire professionals
You will need to file your company’s accounts and tax returns and may need additional software to help you manage these files.
Depending on the size of your business and its locality, you may also need to file for additional documents, especially if you plan to operate part of your business from abroad, I.E an export business.
If you are still unsure of which laws you need to be adhering to and to which, if any laws you think you need protecting against, then it would be best to hire a business lawyer from the get go.
Entrepreneur has a great article on why you should hire legal advice.
Your lawyer should know how to register your business for your relevant countries law standards, this will include tax ID numbers and an understanding of the tax consequences of common business transactions.
In the uk, compliance law is covered for all organisations large and small. This includes the Data Protection Act 1998 and, for the public sector, Freedom of Information Act 2000.
7. Keep Records
Following on from our last step, it’s absolutely necessary for a any business, young or old, to keep records of all receipts and invoices for a company’s expenses. Keeping a record of everything from travel expenses, earnings and tax is required for protecting yourself in the future, you may be audited or caught out for any number of reasons, so keep records of everything you can and keep it organised. If you decided to hire an accountant make sure they are aware of your record keeping and ask them for advice on what you need to be keeping track of.
8. Be aware of pre-trading expenses.
You may be subject to a number of fees to get yourself set up. These may include.
Marketing costs; purchasing of domains, web-hosting, web-design and printed assets such as business cards and flyers.
Professional fees, for lawyers and accountants.
Costs of company formation and registration.
Office hire and equipment. Including broadband, telephone and fax.
Insurance for both public and employee liability.
9. Company formation agents
If you are still concerned about setting up a company by yourself you may require the services of a company formation agent. Agents are licensed by companies house to help form your company. They will deal with the necessary legalities and documentation required for registering with companies house.
Company formation sometimes requires additional documentation, such as a memorandum of association, in which a new business owner declares information about their business, how it will be run, what might be sold. All important information if you need handle any tax disputes or run into any legal difficulties.
LowCost LetterBox offers free consultation on company formation and we can help you with those early stages of setting up. You can check out our company formation packages here.
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