If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year

Trading Entity

One of the first things to consider is what type of legal entity you intend to use. Often people just start and don’t consider what business structure they need until later on. If you have any doubts I recommend you talk it through with your accountant or solicitor.

The basic types of business are a sole trader, a partnership, a limited company or a limited liability partnership. Whilst in some cases the structure can be changed relatively easily, it makes sense to give it some thought before you start. You should also think about your exit plans at this stage, as this may affect your choice of trading structure.

A sole trader is just that. You set up in business on your own. The business is no more than an extension of you in many ways, certainly as far as your finances go. This by far the easiest option for a lot of people, as there is less administration, but it can also be lonely. If you set up on your own look for ways to meet up with other business owners on a regular basis.

A partnership is two or more people working together, your liabilities are similar to those of a sole trader, though bear in mind that usually all partners are responsible for the actions of the others. If you set up in partnership you should have some kind of agreement defining what the shares are and who gets what in the way of drawings and distributions. This will also cover what happens in the event of a major disagreement, or if one partner leaves for any reason.

Trading as a limited company can have many benefits, in particular it means that the business is a separate entity from you. This means that your liability is limited to the amount of share capital you have in the business. There may also be tax savings depending on your circumstances, but you should never make your decision based solely on tax implications.

There are more costs involved and often more red tape than with a sole trader or partnership. A company has to file various forms as well as its accounts with Companies House, and there is a cost involved in doing this, as well as in preparing the information.

A limited liability partnership is like a cross between a partnership and a limited company. It has a set up like a partnership, but the limited liability of a company. It must file records with Companies House in a similar way that a Limited Company would.

There are many areas to consider when deciding what trading structure is best for you. These include among others, the tax implications, your own financial situation – pensions, mortgage etc, whether you need a vehicle, what type of business you are setting up, whether there is a property involved, or a requirement for a property, how many people are setting up the business and what relationships are required.

The best thing to do is talk it over with your advisors and make an informed decision. What you are aiming to do is find a balance between the various issues that works for you.

If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year

A sole trader is just that. You set up in business on your own. The business is no more than an extension of you in many ways, certainly as far as your finances go. This by far the easiest option for a lot of people, as there is less administration, but it can also be lonely. If you set up on your own look for ways to meet up with other business owners on a regular basis.

A partnership is two or more people working together, your liabilities are similar to those of a sole trader, though bear in mind that usually all partners are responsible for the actions of the others. If you set up in partnership you should have some kind of agreement defining what the shares are and who gets what in the way of drawings and distributions. This will also cover what happens in the event of a major disagreement, or if one partner leaves for any reason.

Trading as a limited company can have many benefits, in particular it means that the business is a separate entity from you. This means that your liability is limited to the amount of share capital you have in the business. There may also be tax savings depending on your circumstances, but you should never make your decision based solely on tax implications.

There are more costs involved and often more red tape than with a sole trader or partnership. A company has to file various forms as well as its accounts with Companies House, and there is a cost involved in doing this, as well as in preparing the information.

A limited liability partnership is like a cross between a partnership and a limited company. It has a set up like a partnership, but the limited liability of a company. It must file records with Companies House in a similar way that a Limited Company would.

There are many areas to consider when deciding what trading structure is best for you. These include among others, the tax implications, your own financial situation – pensions, mortgage etc, whether you need a vehicle, what type of business you are setting up, whether there is a property involved, or a requirement for a property, how many people are setting up the business and what relationships are required.

The best thing to do is talk it over with your advisors and make an informed decision. What you are aiming to do is find a balance between the various issues that works for you.

If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year

Trading as a limited company can have many benefits, in particular it means that the business is a separate entity from you. This means that your liability is limited to the amount of share capital you have in the business. There may also be tax savings depending on your circumstances, but you should never make your decision based solely on tax implications.

There are more costs involved and often more red tape than with a sole trader or partnership. A company has to file various forms as well as its accounts with Companies House, and there is a cost involved in doing this, as well as in preparing the information.

A limited liability partnership is like a cross between a partnership and a limited company. It has a set up like a partnership, but the limited liability of a company. It must file records with Companies House in a similar way that a Limited Company would.

There are many areas to consider when deciding what trading structure is best for you. These include among others, the tax implications, your own financial situation – pensions, mortgage etc, whether you need a vehicle, what type of business you are setting up, whether there is a property involved, or a requirement for a property, how many people are setting up the business and what relationships are required.

The best thing to do is talk it over with your advisors and make an informed decision. What you are aiming to do is find a balance between the various issues that works for you.

If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year

A limited liability partnership is like a cross between a partnership and a limited company. It has a set up like a partnership, but the limited liability of a company. It must file records with Companies House in a similar way that a Limited Company would.

There are many areas to consider when deciding what trading structure is best for you. These include among others, the tax implications, your own financial situation – pensions, mortgage etc, whether you need a vehicle, what type of business you are setting up, whether there is a property involved, or a requirement for a property, how many people are setting up the business and what relationships are required.

The best thing to do is talk it over with your advisors and make an informed decision. What you are aiming to do is find a balance between the various issues that works for you.

If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year

If you start as a sole trader or partnership, you can always change into a limited company later on.

Tax

You need to make sure that your business complies with the (extensive) tax and information filing requirements imposed on you. If you don’t you will almost certainly incur problems, and financial penalties.

When you set up in business you have to register with the Inland Revenue for tax and National Insurance. If you will have staff you need to register for PAYE as well.

If you don’t register within the first three months you will be liable to a penalty of ?100.

You don’t actually have to pay your tax until after the year end when you start, but for sole traders and partners National Insurance is paid weekly (or monthly) with a further one off payment at the end of the year once you reach a minimum level of profit.

If you have staff your PAYE must be paid every month and you will have various forms and returns to complete at the end of the tax year (mostly in May) http://www.inlandrevenue.gov.uk/

If you have already appointed your accountant they may do the registrations for you.

VAT

As with tax you also need to be aware of the requirements surrounding VAT.

You don’t have to register for VAT straight away, but it maybe worthwhile doing so. You have to register when your turnover reaches the registration threshold - ?56,000 in 2003/04, unless you are in an exempt industry.

You can voluntarily register for VAT from day 1 (unless exempt). http://www.hmce.gov.uk/

Accountant

Find a good accountant, not someone who will just do your tax return at the end of the year but someone who is proactive and forward thinking. Ask around, get recommendations and interview a few. Make sure you like the person / firm and are happy to work with them. (See “10 Things To Ask Your Accountant”)

Banking

Open a bank account. Keep all your business transactions separate from your personal ones. You will find it much easier to manage – your accountant will like it too! Some people do actually just use their personal account. As with everything else in your business it makes sense to keep it all separate from your personal affairs – even if you are a sole trader working at home.

So find yourself a bank and a decent bank manager, and open a new account for the business. Or probably two or three. Have a current account and at least one savings account. This makes it easier to manage your money. Have one savings account for tax and VAT. Every month transfer the amount you owe for VAT, PAYE and taxes into this account and leave it there until the payment is due. That way you never have to worry about how to pay these important bills. If you are the kind of business that receives money in advance from clients or deposits, it is also a good idea to hold this in a separate account. Just transfer it into your main account as you do the work.

Where to work

Decide where you are going to work. You have many choices – at home, in an office, in a warehouse, near to customers, out of town….. What is right for you and your business? Deciding where to base yourself may depend on many factors. Unless you are starting some kind of retail business or need something like a warehouse, you really can be where you want to these days.

Firstly do you have to be in a certain place? And I mean have to as in a shop must be on the high street, rather than you think you ought to be based somewhere for the prestige, or because everyone else in your industry is there. Do you need to be next to a transport link, either for deliveries, access to a distribution network or because you service those industries that do?

Do you need a smart office? Very unlikely I suspect whatever you m