Self-employment has been the fastest-growing part of the UK labour force in recent years, with the number of sole traders and partnerships growing by 25% between 2000/01 and 2015/16.
If you’ve got a business idea that you’ve tested and researched, and you’re ready to get started with your new venture, what’s the next step?
Here are a few important points to consider.
Getting your business plan right
To explain your ideas to a bank or investor, you’ll need to put together a clear and convincing business plan.
This should include details on the way your business will operate, your market research, your goals and how you’ll achieve them, and realistic financial forecasts to prepare you for different scenarios.
Putting these details on paper can also help you to make sure you have a clear plan in mind, as well as highlighting any potential flaws.
Once you’ve put a business plan together, keep referring back to it to make sure you’re on the right track and update it when necessary.
Sole trader or limited company?
Most people starting a business for the first time have considered this question: should you set it up as a sole trader, a limited company, or another kind of business structure?
Choosing the right trading entity can depend on the type of business you’re starting, but it’s also about how much administrative work you want to take on.
Starting as a sole trader is fairly simple. You’ll be operating as an individual, so there’s no division between your business and personal finances.
Forming a limited company means your personal finances will be separate from business, reducing your liability for any losses. However, it comes with more administrative duties than operating as a sole trader.
Do you need insurance?
Among the many tasks on your to-do list as you set up your new business, it’s easy to forget insurance. But if things go wrong and you don’t have the right insurance setup, you could find yourself in a tricky situation.
If you expect frequent visits from members of the public in your business premises – such as a shop, or a cafe – you may need public liability insurance.
This provides compensation for someone if they are injured because of a mistake in your business activities.
You could also consider getting product liability insurance, which offers compensation if someone suffers injury or illness because of goods you have produced. This is particularly relevant if you work in a higher-risk sector, such as food and drink, toys or electrical goods.
If you employ staff, you’ll be legally required to have employers’ liability insurance. It might also be worth looking at buildings insurance to protect your premises if they are damaged in an unexpected event.
As well as making the necessary preparations to start your business, the earlier stages of running it are a good time to put systems in place for your future record-keeping.
Using online accounting software, you can keep your records up-to-date and view them on the go.
This software is also compliant with Making Tax Digital, which is currently compulsory for most VAT-registered businesses, but is likely to be rolled out further in the near future.
Our business startup service can help at every stage of your new venture, from preparing a business plan to setting up a record-keeping system to meet statutory requirements.
Talk to us about starting a business.