Start up tips | Starting a small business

Getting the basics right from the start will save you sleepless nights in the future, says Mark Dye.

Deciding to go it alone and start a small business of your own can seem daunting at the best of times. Whether you choose to work from home or are looking for premises, this and the financial side of things can end up stressing you out before you even get started.

It’s a decision I took myself back in 2005 and at the time I wasn’t quite sure what to do. Thankfully I already had a couple of clients and thought I’d just crack on with bringing in the money and sort out the finer detail later. For me the business began in my kitchen/dining room…

While this may seem like a good idea at the time – as you’re busy and the money is coming in – it’s something you can certainly regret at a later date when you realise you’ve got a year’s worth of receipts, invoicing and bookkeeping to do.

Better to put some process in at the start. The first thing for many to consider is whether or not you go down the route of being a sole trader or set yourself up as a limited company. If you have a relatively small turnover and want the simplest way to set up a business then most accountants will probably advise you go down this route. One thing to remember here is that you would be personally responsible for any debts run up by the business should you have any difficulties.

The other route, and one that keeps the company’s finances separate from those of your own, is to set up a Limited Liability.

There are various pros and cons to both of these, with the latter being more sensible if you see your company having a very healthy turnover. It’s also more tax efficient in that sense, too.

Of course, your best bet is to get a good accountant right from the very start. You can look after the financial side of things personally, but I would strongly advise against this unless you consider yourself to be a real magician on the numbers front. A good accountant will save you thousands throughout the lifetime of his work with you and that figure, which can be as small as £500 – £1000 for doing the yearly books, will feel like small change in the grand scheme of things.

If you know people running similar businesses to you, ask them who they use, the problems they’ve faced and about their experiences on this front. I found the ICAEW directory of firms and forums particularly useful too. While there are some fabulous accountants out there, others do cut corners and this could end up landing you in trouble.

Setting up your own small business should ultimately be rewarding, exciting and ultimately profitable. And by laying firm foundations and seeking solid advice, you’ll find you’re more relaxed and focused to get on with the job in hand.

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