Although starting a business in the midst of a pandemic may seem like a crazy idea, now might be the ideal time to consider it. Many people have been laid off because of the pandemic, or have been on furlough for months. This has given them the time to think about what they really want to do with their life. As a result, many people have seized the opportunity to start a new company during the COVID-19 pandemic.
According to a new analysis by the Office of National Statistics of VAT, HMRC, Companies House data and business surveys, more than 95,000 new businesses were created between July and September in the UK. This is a 5.3% increase on the same period the previous year. And a 7.2% increase on the previous quarter. A similar thing happened after the 2008 financial crash. A wave of new businesses was established which helped to fuel the economy. This significant growth in start-ups and self-employment was fundamental to our recovery from the last recession. We fully expect to see a whole new wave of industries and small businesses forming in the coming months and years. This will play a vital role in the UK’s economic bounce back.
If you are considering launching your own business, there are several things that you should consider and put into place so that your start-up gets off to the best possible start. Here at Maple, our expert business advisors have put together a short guide to help anyone thinking of starting their own business.
Create a business plan
Before actually deciding on starting your own business, you need to consider what your business will be and what will it do. For example, you will need to demonstrate qualified experience in the type of business which you are wanting to launch, write down your business objectives, decide on how you’re going to fund your business, what your expectations for sales, investments, and profits are, and write a complete and formal business plan which contains all of this information.
Even if you are not wanting to borrow money to start your own business, having a business plan will help you gain an understanding about your current situation and give you a decent indication as to your future possibilities.
Choosing the right structure for your business
It is vitally important to decide early on if you are going to launch your business as a sole trader, limited company, or a partnership. But before you choose the entity of your business, you should also consider the following:
- Commercial risks
- Financing options
- How you will extract your funds
- Expected profitability
Funding your new business
Your business plan should also include a cash flow forecast, which will enable you to identify your cash and funding needs in the early stages of your business. Consider how much of this you will be able to fund by yourself and investigate whether there are currently any active or up-and-coming government schemes which could help you. There are many start-ups and fledgling business schemes that you may be able to access based on your situation. Your local council’s business hub is an excellent place to start.
Whether it is for funding or your ongoing banking requirements, you should always identify your ‘friendly bank manager’. This can be one of the most vital contacts for your business and it is crucial that you are well prepared for that ever-dreaded critical first meeting.
Consider your accounting report needs
There are many software solutions available and we can help match you to the correct software solution for your specific needs. We are certified and experienced with a variety of different cloud software solutions, including QuickBooks, Xero, and Sage, which means we can provide impartial advice to help you choose the most suitable cloud accounting system for your business.
Don’t forget the tax
The type and rate of taxation will ultimately depend on the form of business structure you are using. However, the taxable profit will usually differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.
The rates on National Insurance contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ between the two. In a company, it may be possible to avoid National Insurance by paying dividends rather than a salary.
You should decide whether or not it is in your best interests to register for VAT from the time of starting your business up. Whether you decide to register for it now or in the future, both the profitability and the cash flow of your business will be affected in some shape or form. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register, without request. If you are a VAT registered company, then you will also need to consider the appropriate software to ensure that you comply with the Making Tax Digital requirements.
One of the main advantages of registering for VAT when you start your business is that you will be able to reclaim VAT on purchases which were made before you start trading. You shouldn’t worry though, if you find that it is best to register at a later point in time then HMRC have made it possible for traders to reclaim VAT prior to their registration provided that the claim is made within certain time limits.
How can Maple Accountants help you?
If you are looking to start your own business and are wondering where to start, we can help. We have a team of business advisors who specialise in helping start-up businesses, who can guide you of offer advice from day one by helping to decide on your business objectives, decide on the best business structure for you, create a cash flow forecast by analysing your cash flow position, help you to find the best bookkeeping system for your business and discuss the tax savings options available to you.
We have a range of experience helping business start-ups in a wide range of industries and offer a variety of services and packages as well as a fully outsourced accounting service where we look after all the financial aspects of your business either on a weekly or monthly basis and provide either monthly or quarterly managements. For detailed help and advice on setting up a new business, download our new business kit. To find out more about Maple or to arrange an appointment, visit our website or contact us at firstname.lastname@example.org or 01332 207336.