Starting up in business

There are many issues that must be considered when starting up a new business. This article provides a brief outline of some of these.

A business plan will help to assess the viability of the business and is essential when applying for funding. A typical business plan will include a description of the business, marketing and sales strategies, details of the operation of the business and financial forecasts.

The level, source and repayment terms of the funding required by the business should be given careful consideration. The type of funding adopted and the terms attached to this will impact on the tax treatment, cash flow position and credit rating of the business and will also need to be taken into account when deciding on the structure of the business. Various forms of funding may be available ranging from grants and the use of personal savings through to bank loans and equity funding from private investors.

The most appropriate structure for the business will depend on a number of factors. These include considerations such as anticipated profit levels, tax efficiency, control, level of flexibility regarding withdrawal or retention of profits, sources of funding, third party requirements, limitation of liability and future plans for the business.

Agreements relating to the business should be formally documented. Business transactions should be maintained separately from personal transactions and a separate business bank account should be used. Appropriate insurance cover should be obtained.

It will be necessary to register with HM Revenue & Customs for Income Tax or Corporation Tax purposes. It may also be necessary to register for VAT, PAYE and a workplace pension scheme. Limited Companies and Limited Liability Partnerships are required to register their formation with Companies House.

There are various accounting and taxation requirements including bookkeeping, preparation of accounts and direct and indirect tax compliance. Professional advice should be sought in this connection and to identify any tax reliefs and planning opportunities that are available.

Rennie Welch LLP accepts no liability on the basis of this article and detailed advice should be sought before entering into any transaction. We will be running a series of events in connection with business start ups and growth. If you would like further information about these or require assistance in connection with any accounting or taxation matter, please contact Lynn Miller at Rennie Welch on 01573 224391 or by email at lynn.miller@renniewelch.co.uk