Individuals are increasingly looking to set up their own businesses or become self-employed, either as a main or additional source of income. Opportunities often arise through extensive use of the internet; therefore, setting up a small business is something that many people have to tackle at some point.
Why set up a business?
The first step is to consider the structure of the business. Decisions need to be made in terms of whether the business will be operated as a sole trader or whether a separate entity through a limited company will be a better option. The main difference between the two is the liability for the business’s debts.
There are multiple advantages and disadvantages to both approaches. Whether you are setting up an accountancy recruitment agency or selling through an e-commerce company such as eBay, it is essential to do your research at the outset.
Getting the structure for your accountancy recruitment agency or online store right at the outset can be very beneficial, not only from a financial perspective to ensure the correct amount of tax is paid but also to give the best possible impression to potential customers. Failing to set up the business correctly can imply that other aspects of the business may not be efficient, so it cannot be expressed strongly enough how vital creating the right impression is. The name you choose for your business can also be a valuable tool.
Process of setting up a small business
Once the decision has been made as to how a small business will be set up, the chosen structure will impact the required filings with HMRC. A sole trader, for example, will need to register as self-employed and fill in the necessary returns.
Any failure to register correctly or on time can result in fines being incurred and legal difficulties; therefore, ensuring advice is gained at the outset is both time- and cost-efficient. Making changes later down the line is possible but can lead to additional administration. The time you spend speaking to professionals will be time well spent.
