The idea of being your own boss and living a life as a successful entrepreneur isn’t always the way you see it played out on, TV, films, Instagram and TikTok. Very few business owners drive Lamborghinis or fly to important meetings piloting their own private jets.
Nevertheless, the prospect of being the owner and controller of your own enterprise with ambitions for success, a better lifestyle and self-fulfilment remains very popular. Who wouldn’t want to control their own future by being the boss? Having your own business is an attractive proposition, an easy sell, with the recruitment poster for entrepreneurs simply saying, “Higher Yourself Today”. I do like a play on words.
As a woman, I’m encouraged by the increasing confidence of female entrepreneurs, stepping into self-employment and not just “making a go of it” but proving how successful they can be. What’s less impressive has been the historic lack of female role models and support, however, initiatives like “Women Mean Biz” and Sahar Hashemi’s “Buy Women Built” are helping to redress the imbalance but there’s still some way to go.
Regardless of gender, one common challenge for any start-up is knowing what to do when it comes to the practical, some may say the “boring” aspects of creating your business.
Getting the “set up” right from the outset can save a lot of time and avoid problems in the future. If this is an area you’re struggling with you’re not alone. I’ve direct experience of helping clients who’ve struggled because of assumptions or poor advice when they originally created their companies.
For that reason, I thought it would be helpful to share with you my top 10 list of things to consider when you’re starting a business.
For clarification, this top 10 list applies to setting up a business in the UK:
- Business Structure: There are four main legal structures a business may take.
- Sole trader, – simplest setup, pay tax on profits, submit HMRC self-assessments to cover your tax liability.
- Partnership – minimum of two partners who share the profits and liabilities
- Limited liability partnership – a separate entity which needs to be registered with companies house, annual accounts required, liability limited to the level of partner investment.
- Limited company – again a separate legal entity that also needs to be registered with companies house. Annual accounts and confirmation statements are required, the business is the profit/ cost centre, and it remunerates owners who have shares or a guarantee.
NB: Shareholder disputes are one of the most common cases I deal with suggesting that clarity and understanding the relationship between shareholders at the outset might save a great deal of pain in the future.
2. Tax Registration: Register for taxes with Her Majesty’s Revenue and Customs (HMRC). This includes obtaining a Unique Taxpayer Reference (UTR) and registering for Value Added Tax (VAT) if applicable. VAT registration becomes compulsory if your trading turnover is £85,000 or more. This threshold is set until March 2024.
3. Business Insurance: If you’re employing staff even if only on a casual basis, Employer’s liability insurance is compulsory. You’ll need to assess the necessary insurance coverage for your business, typical examples are:
- Public liability insurance,
- Employer’s liability insurance, or
- Professional indemnity insurance
4. Employment Law: There are clear guidelines and laws governing the employment of staff. Be sure to put in place the appropriate measures. Here’s a list of some, if not all, of the considerations you will need to bear in mind when it comes to employing people:
- Contracts of employment
- Minimum wage requirements,
- Working hours,
- Holiday entitlement,
- Health and safety regulations.
- Register as an employer with HMRC and set up a payroll system.
- Put in place policies to ensure awareness of and compliance with equality diversity and inclusion, grievance and disciplinary procedures, maternity, paternity etc.
5. Data Protection: This can be something of a rabbit hole you may fall into or just wish to avoid altogether, due to its “heavy” nature. I would always recommend familiarising yourself with the basic principles of the General Data Protection Regulation (GDPR) and ensuring compliance with data protection regulations. Safeguard personal data and understand individuals’ rights regarding data privacy. Best practice to prevent cyber security breaches is another area of high-risk worthy of attention. If in doubt seek out specialist advice.
6. Licensing and Permits: Do you need specific licenses or permit to operate within the law? This will depend on the industry and activities involved, such as alcohol licensing, health and safety permits, environmental permits or PRS licensing for the use of copyrighted music.
7. Intellectual Property: A business’s value can often be measured in its assets as well as its potential profits. If your business name and/or products are unique to you, protect them by registering trademarks, copyrights, or patents if applicable. Always undertake due diligence by searching the trademark register to make sure your business does not infringe on existing intellectual property rights.
8. Financial Compliance: Many new business owners struggle with bookkeeping and maintaining up-to-date and accurate records. I’m a big fan of working to cashflow forecasts to track income and expenditure and to ensure the business doesn’t overstretch itself when funds are tight. Establish proper bookkeeping practices and maintain accurate financial records. Comply with accounting standards if you’re registered with Companies House and submit annual financial statements. Take the time to understand which taxes apply and how to ensure you’re covering the liability.
9. Health and Safety: Think back to the beginning of Covid-19 and how businesses had to adapt. Those that coped best had effective health and safety policies that were already in place and would only require tweaking. If your business uses machinery, staff drive company vehicles, you have the public on-premises or are involved in food preparation… ensure a safe working environment for employees, customers, and visitors. One way to assess how effective your plans are is to run a test risk assessment. Role-play an event and see how your teams respond. It will be essential for you to provide the necessary training and comply with health and safety regulations.
I wouldn’t be surprised if you found the above a little daunting. It goes some way toward explaining why business ownership is not for everyone. The idea of running a company sounds exciting but the day-to-day realities of life as an MD, CEO or founder can prove very perplexing. One of the greatest challenges is adapting your working style and preferences to tackle matters that might fall way outside your comfort zone.
On the plus side the bits you might find dull and boring I find interesting, which I guess is why I do the job I do. I’m interested in the people behind the ideas for a business and am passionate about helping entrepreneurs realise their potential. This in turn takes the pressure off of these individuals and gives them more time to do what they do best. Whilst we do not advise on every point in list above, we have the contacts that do, and we can certainly introduce you to those who will be able to help alongside us.
If you have an existing business and would like to run a housekeeping check on the way it’s configured or you’re about to embark on a new venture but now realise there’s far more to the process than you imagined please drop me a line and let’s have a chat.
T: 01225 750036