Regardless of how good your idea is, or how great the service you intend to provide, setting up your business or company properly from the outset, is an absolute must for any enterprise wanting to be a lasting success. It is of paramount importance to have the sole enterprise, partnership or Limited Company properly defined and documented. It is also vitally important that when you set up your business, you are fully aware and compliant with all of the various laws and regulations you need to adhere to, some of which may not be immediately obvious.
Whether you are setting up a business in Cumbria or Cornwall is going to follow exactly the same rules, and here are some of the more common forms of doing business.
Sole Trader
As a sole trader, you can legally operate by just using your name, without having to register it, though you should register it as a Trade Mark, if you want other people to not be able to also trade under the same title. Any official paperwork, such as letterheads, quotes and invoices must include your name and the business name if one applies. You are responsible for keeping records of your expenses and revenue, register for VAT, if your turnover exceeds £85,000, though you can do so voluntarily before reaching this figure if it is beneficial to your business. You must pay taxes on profits and Class 2 and 4 National Insurance.
A Business Partnership
To set up a partnership, you must select a name, choose a nominated partner and register with HM Revenue and Customs. The nominated partner is the one who becomes responsible for managing the business records and the partnerships tax returns. In a partnership, you are dually responsible for any losses and must pay tax on each person’s share of any profits. It is worth noting that one or more partners, do not have to be an actual person, but can be a Limited Company.
The Limited Liability Company
This is significantly more complicated than those previously discussed. The benefits it brings is that the company becomes an entirely separate entity from an individual. It has separate finances, is legally separate from those who run it and can keep any post-tax profits. To set up a Limited Company, you will need to incorporate your business by registering it with Companies House. You will need a Company name and registered address, at least one Director, details on shareholders, of which there must be at least one and what is known as a SIC Code, which is an identifier, of what your company actually does. The company must draw up a memorandum and articles of Association, which defines what the company is and its general rules. You can then register the company, detailing all of those who are what is known as People with Significant Control, which generally means, those with voting rights, or more than 25% of the company shares.
Whichever of the business options you are planning, getting the whole thing set up properly is extremely important. As a house stands on its foundations, so does the company. It is an extremely good idea, to get assistance from your local legal professional, to ensure you do it right and know your responsibilities from the outset.