Starting a Business [cont.]

This post is the last in the series of content which is all about factors to consider when starting a business. If you are interested in reading the other posts, please click the links below:

Starting a Business

Starting a Business [cont]

In this blog, we look at the FAQ’s when people are looking into starting a business.

Starting a Business FAQs

The overview above covers the main issues, but there are certain questions that also usually crop up when starting a business, especially if it’s your first time.

Check the FAQs below for some of the common questions we are asked – and remember you can always turn to your accountant with financial queries, or your solicitor with any legal issues you are concerned about.

Are there grants for starting a business?

There are all kinds of funding options when starting a business, from bank loans to private investment, but grants can be a particularly good option as they usually do not have to be paid back.

Because of this, there is often a public interest aspect to the funding, and you may be more likely to receive grant funding if your business is especially innovative, for example, clean and green technology, or if it provides a valuable service to the local community.

Look out for small business grants, funding for high-growth businesses, and specific sectors that qualify for government support; also enquire with your local authority about any regional funding that may be available in your area.

What permits are needed when starting a business?

Starting a business in the UK may require certain permits or licences – the Licence Finder on GOV.UK can help you to determine any that apply specifically to your business type, and a solicitor can give you a professional second opinion (or first opinion!) on this issue too.

You might be surprised how many licences you need – for instance, if you want to play background music, you may need a PRS licence; if you process information about customers or staff, you should notify the Information Commissioner’s Office; and if you want to place tables and chairs on the pavement outside your premises, or even a free-standing advertising board, you will need a licence to do so.

These are not issues you can just ignore, or you could face substantial costs or prohibition notices further down the line; in the worst case, you might find you cannot operate at all without a specific licence, so be certain you have everything in place from day one.

When starting a business, what is tax deductible?

Tax deductible expenses are one of the most important perks of running a business – they are your opportunity to minimise the amount you lose to the tax man, but you can’t just put any numbers in those boxes on your tax return.

Your accountant can help you to determine what you can offset, but in general, any legitimate expenditure on your business – from premises, to stock, to equipment, utilities and staff costs – can be deducted from your gross income to determine your net taxable profit.

If your business is based at home, your accountant should be able to help you work out how much you can claim – for example, as a portion of your domestic utility bills that accurately reflects the extra you spend because you are based there for work too.

As far as possible, you should keep any receipts you receive for business-related expenses, ideally organised in chronological order or at least separated into each month, so that if you ever have to, you can prove the exact amount you had to spend on everything from computers and machinery right down to pens and paper.

Remember, tax deductible expenses are offset against your gross earnings before the tax is calculated – so the impact on your final tax bill will be a fairly small percentage of your expenses; you won’t save £1,000 in tax by spending £1,000 on stationery.

What to research when starting a business?

If you’re thinking of starting a business, you probably have an idea of what you want to make or sell, or the services you want to provide, but that doesn’t mean there is a market for your concept. Even the best idea can fail if the market for it is already too crowded, or if it simply costs more to supply it than people are willing to pay.

Make sure you have a clear business plan, and an idea of who your target customers are, a realistic price you can expect them to pay, and how hard it will be to attract new customers; is there an untapped pool out there, or will you have to entice them away from contracts with competitors?

There are other more (literally) concrete questions to ask if you need business premises – how much will that cost, where will you be located, and how strong or competitive is the local market?

You should research everything you need to know for day one of opening your business, as well as the broad medium-term issues like operating costs and market potential.

Beyond that, longer-term problems can be tackled as they arise, presuming your first 3-6 months have left you in a position to do so.

Should I use a qualified accountant?

Generally speaking, yes. It is possible to start a business without an accountant, especially if you’re self-employed rather than needing to file company accounts, but it’s not easy.

In particular, you need to know your tax obligations right from the start, so you don’t get a nasty shock the first time you reach a tax payment deadline.

You need to register with HMRC as a sole trader or company, you need to record your outgoings to suppliers and income from customers, file your accounts before the relevant deadline each year, and pay your tax bill on time too.

Remember, depending on how much you earn, your total tax bill can be around a quarter to a third of your earnings – and a good taxation accountant can help you keep on top of how much you owe, and potentially find ways to reduce your tax bill too.

Do I need a solicitor?

It is possible to start a business without using a solicitor, but there are often legal issues that it’s best to be aware of, and keep on top of. You might have personal history that could interfere with you running a business, such as a history of personal insolvency or other court judgments against you, and a solicitor can advise on how serious of an issue any of these are.

Or you might just want to check the legalities of running a business in a particular industry, including fair competition with rivals, specifics like what your company can be called, and other regulatory and legislative issues.

In short, a solicitor is a professional, independent voice on any concerns you might have; they will always work for you and in your interests, but they will give an honest opinion on any aspects of your business that could open you up to legal risk.

If you would like to talk to one of the team about starting a business, simply fill in the form below and we will be in touch: