According to a newspaper report in May 2014 in The FT the number of company formations in the UK has hit a new high. In the 12 months to March 2014, there were 526,874 incorporations. This is the highest amount of new company formations since Companies House began recording the number in 1997.
The growth is spread across the UK, with Scotland totting up the most incorporations in a year with 27,602 in the period above.
This may suggest that confidence in the economy is returning as people set up their own businesses.
So, if you are an aspiring entrepreneur, what do you need to do in order to set up your company correctly?
Firstly, note that no matter how large or small your venture – whether you are a sole trader or are planning on being a limited company, it is important that you set your company up to meet the required standards – as well as understand your obligations to the relevant Government bodies (such as the HMRC, for example).
If you are just starting out, you may want to use a specialist company like RM online that offers company formation services. They can make sure your business is set up legally and covers points such as the following below – note they are not in any particular order:
- the name of your company – checking it is available, then registering it at Companies House;
- sorting out the type of company formation – so whether you are a sole trader, a partnership or a limited company etc;
- detailing the Memorandum and Articles of Association as well as other documents you need to have as part of your incorporation;
- whether you should be VAT registered;
- tax dates and deadlines;
- the split of shares if the business is a private company;
- deciding who will be the company director/s; etc.
These pointers are just the tip of the iceberg, but do give you a feel for how a company needs to be incorporated, as well as your other obligations.
Once the company is set up
You have registered your company – now what?
- you will need to think about business stationery – and the rules relating to it (so the information that must be printed on all your stationery about your business);
- depending on the nature of your business, typically you will need to know about the Data Protection Act and whether or how it applies to you and your customers;
- decide whether you have enough time (and skill) to do the book keeping and end of year accounts. These are two different roles. A book keeper will generally keep good and accurate accounting records. An Accountant analyses these records at the end of year in order to show profit and loss etc; calculates any corporation tax due; and submits the records to HMRC on your behalf;
- insurance – there are a number of different polices that may be applicable to your enterprise, including:
- buildings insurance if you own the business premises;
- contents insurance – this could cover stock, equipment etc;
- employers’ liability insurance – this is a legal requirement for most businesses who have more than one member of staff;
- public liability insurance – this protects you against the financial ramifications of someone having an accident as a result of being on your premises and trying to sue you;
- shop front insurance (if relevant);
- personal indemnity insurance – this insurance helps with any costs associated with you or an employee being accused of slander, loss of data and a whole raft of other events that could seriously affect your business;
- you may need keyman insurance if someone in your organisation plays a very important role in the business and the company would suffer if something happened to them (eg. in terms of knowledge, their contacts etc) …
Even people working from a home office may need some aspects of the above mentioned cover – so it is imperative you seek independent advice as to what you may need.
Once the hard work is all done and you have set up your business and made sure it and your employees are properly protected, you can start with the exciting stuff – getting some clients!
Bio: Leah Howells is a copywriter living in Margate. In her spare time, she researches family history and walks her two rather large, yet adorable, Rottweilers.