For most small UK businesses, setting up is relatively quick and It’s entirely possible for you to set up a business in one day. In this article you’ll learn everything from A-Z, like how to register your business and the rules around employing people to work for you.
How to Register your business
The first thing you need to do is register the business with Her Majesty’s Revenue and Customs (HMRC). The good news is you can do this online regardless of whether you plan to become a sole trader, a partnership or a limited company.
If you plan to be a sole trader you’ll find it very easy to set up your new business, however, you should remember that you alone are responsible for the business’s debts.
If you’re looking to start a limited company all of the finances will be separate from your personal bank accounts. However, you will need to keep on top of a lot more management and reporting responsibilities that come with it. We suggest hiring an accountant to undertake this work for you to start with.
Finally, if you plan to set up a partnership you’ll find it’s the easiest way for two or more people to run a business. Each of you will share the responsibility for the business’s debts and you will also have accounting responsibilities too.
If you’re unsure on which is best for you, you can always read more in depth about the types of business registration on the UK Government Website.
How to Name your Business
A good business name can make or break your business. Many businesses make the mistake of sounding to generic or similar to other businesses in their industry, give your business a unique name so that it sticks in the mind of your potential customers. That being said, naming your business can be both fun and excruciating, for those less creative than others, if you’re finding it hard to come up with an original business name, you can use tools like BusinessNameGenerator.com for some suggestions.
What are your responsibilities as a Business Owner
Depending on what type of business you’re running you may need a licence. If you intend to trade in the street or sell food you’ll need to apply for a licence.
Again, we recommend visiting the UK Gov website. They have a great step by step tool that will help you decide what licenses your business needs. Find out what license your business needs here.
If your business has a physical premises, if you intend to employ people or if you want to offer services to members of the public, you’ll need insurance.
One type of insurance you may have to purchase is known as ‘Liability Insurance’. Lets take for example that you were to set up a gardening business. This type of insurance would cover you for a range of accidents, such as if you were chopping a tree down and it fell onto your customer’s house, broking the window. Having liability insurance ensures that the cost of a replacement window will be covered. The last thing you want is to be out of pocket when your out to make money!
Some businesses need to have insurance by law. If you’re going to employ people you will need to have ‘Employer’s Liability Insurance’. Likewise, if you are going to be using vehicles as part of your business you will need ‘Commercial Vehicle Insurance’.
If you’re thinking of setting up a business whereby you give advice or offer skills or knowledge to other people as part of your work you may need ‘Professional Indemnity Insurance’. This type of insurance can help to protect you from claims for damage or loss that are made by your clients or a third party. Claims such as these are usually made if negligent advice or negligent services were offered.
What to know when Selling Products or Services online
If you plan to sell products or services online over the telephone, by mail order or text message you must provide HMRC with specific information. They will need to know your business name, address, contact details, product or service description, how people can pay and how you plan to deliver the goods or services.
Buying or Selling Goods
If you plan to buy goods from other countries or sell goods to them you will also need to let HMRC know. They will want to know what you plan to buy or sell, how goods are going to be paid for, and how you plan to deliver or take delivery of the goods.
Storing Personal Information
If you are going to store personal information, Her Majesty’s Revenue and Customs will want to know why you need to store the information, how you’re going to store it and how you’re going to keep that information safe.
Where you Plan to Work From
If you plan to run your business from home you may need to pay for insurance if you sell products from your home. You may also need to pay business rates on the room or rooms that you use as part of your business. The good news is that you can get tax allowance if you run your business from home and you’re in a partnership or you’re a sole trader.
If you are running a business from a building that’s separate from your home you will need insurance. The insurance will have to cover the cost of your products. You will also need to ensure the building complies with recent health and safety laws. You will also be responsible for the safety of all the electrical equipment, gas and fire safety. You will need to learn how to manage asbestos (If appropriate). You will also need to ensure the business is of a reasonable temperature to work in, has enough lighting, ventilation and space. It is also your responsibility to ensure there are enough bathrooms and washing facilities, safe equipment and drinking water.
Paying Business Rates
If you plan to run your business from a property that you’re going to rent or buy for business purposes you will have to pay business rates. The good news is that if the business is a small one you may be entitled to a discount. You may also be entitled to claim expenses for your property, office and equipment.
Employing People to Work for you
If you are going to employ freelance staff or agency workers you will need to ensure that all of their health and safety rights are protected.
When it comes to employing people to work for you there will be a few more responsibilities that you’ll need to adhere to. These responsibilities include running payroll correctly, paying for your employee’s National Insurance and providing them with a pension. The good news is that you may be entitled to a reduced National Insurance bill.
Staring a small business in the UK can be fairly easy. You can get advice from HMRC, and you may even be entitled to financial help from some government-backed schemes. It’s absolutely vital that you run your business in accordance with the guidelines that HMRC have set out. This will ensure that you stay on the right side of the law and your business can run smoothly and without any surprise visits from HMRC.