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Steps to building a new business

3 min read
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By : Pav Bagri

Taking the plunge and setting up your own business is an exciting time – you become your own boss, you get to make all the decisions and you can delegate everything. Easy right?  Without stating the obvious struggles, we all know, even for those of us who have never done it, setting up a business is far from easy. But with careful planning and consideration there are steps you can take to ensure your business idea succeeds.

In addition to the obvious questions, have you really thought about the business opportunity? Have you analysed the competition? Who is your audience? Is there enough potential money to be made? All of which are all very important questions, here are some other key other considerations to make.

Business plan

Creating a business plan is essential. You will almost see this in every kind of business start-up guide and for good reason! A business plan gives you the opportunity to really focus on your business idea and the output. Preparing a full proof business plan can make all the difference and is key to successful planning. Spend time on your business plan.

Premises

At the beginning stage, it is likely that you are working part-time from home on your new business venture whilst working full time. This is a good way of testing the market to see if your business idea works and with no overhead costs this is a great way to start your new business journey.

As your business grows you will need to invest more of your time to making it successful. At this stage it’s probably the best time to take the plunge and start working full time on your business. It’s at this point you should consider setting up an office outside of the home. There are a hundreds of small offices available for rent who cater for individuals and small teams who are in the process of starting up a new business – take a look at Workspace Hub in Leeds centre. Ensuring you have a solid working environment is crucial to the success of your business.

Finance

Financial security and stability is extremely important when setting up a new business. You need to be prepared that it’s unlikely you will be earning any profit for the first few months. So, ask yourself – In the meantime do you have enough money to support your lifestyle?

Plan ahead what capital you need to set up/launch your product or service and brainstorm the different channels you can take to get the capital you need – a bank loan, family, savings, investors or even a government grant. Take a look at our business calculators to get you started.

Tax

Once you become self-employed, the tax rules are quite different from those that may have applied when you were an employee. Understanding the tax system and your tax obligations is vital to ensure you set enough money aside and don’t incur any penalties from Her Majesty’s Revenue Customs (HMRC).

Your key responsibilities from a tax perspective will be to:

·    Decide on what type of business you will be (sole trader, partnership, limited company), which will determine your tax obligations, and register with HMRC.

·       Pay income tax on your profits and National Insurance.

·        Pay your debts and bills

·        Keep records of your business’s sales and expenses

·        Register for VAT if your turnover reaches the VAT threshold of £85,000

You may also want to think about setting up a Pay as you Earn (PAYE tax). Take a look at our guide for understanding the tax system for the self-employed.

All of the above requires careful thinking and effective tax planning in order to ensure your tax is managed efficiently and to maximise your profits and minimise your tax liabilities. Decisions’ like these should be discussed with an accountant. Contact me on pav@hentons.com or to get your started, explore our business start-up guides.

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