Thinking of starting a business? Here’s 5 things to consider, from a Finance Manager.
If you’re thinking about jumping into the world of self employment but you’re not sure where to start, then this article is for you. Wizu’s Finance Manager, Will, has shared 5 important things to consider when kickstarting your first business.
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1. Have you registered for HMRC ?
After you’ve decided to take the plunge and done all the exciting things like choosing a name, designing logos and spreading the word to anyone who’ll listen, you’ll need to register with HMRC and get yourself a government gateway account.
Just google “register self-employed” to sign up and get your Unique Taxpayer Reference, or UTR, which you’ll need to file your taxes.
You’ll also receive an activation code which you will need to start using your gateway account.
You should register self-employed as soon as possible, and before the 5 th October in your business’ second tax year.
2. Limited, Sole Trader or Partnership?
You also need to consider what the structure of the business will be. If you are starting out alone, this will usually be as a sole trader, but it could also be as a limited company.
If you’re going in with a friend then it might be a partnership – speaking to an accountant can help you decide and plan for your costs and taxes.
The structure of the business can affect perception, liability, cost and the amount of red tape involved amongst other things. Most people who start out do so as a sole trader, to keep costs low and get started quickly.
As a sole trader, you are responsible for filing and paying your own tax. Your profits will be taxed in a similar way to as if you received a salary, with both PAYE and national insurance due. The tax year runs from 6th April to the 5th April (due to England switching to the Gregorian calendar in medieval times– but that’s another story) and your tax return is due for both submission and payment by the 31st Jan following the end of the tax year.
That means for this year (20/21) the tax year will end on the 5 th April 2021 and your tax return and payment of any tax owed is due before 31st Jan 2022.
3. Will You Register For VAT?
Registering for VAT is compulsory once your sales reach £85,000 over a 12 month period (calculated on a rolling basis) and so you do not need to register for VAT straight away, but might wish to do so for perception purposes.
Bear in mind however, that registering for VAT means the price you charge goes up – but this won’t bother other VAT registered businesses so make sure you know your client base before making this decision!
4. Have you accounted for all costs?
There are other cost related things to consider too when first starting out. What licensing tools and software will you use? How will you market yourself – do you need to invest in online ads or social media support? And will you pay for an accountant?
It’s helpful to make a list of any services or tools you’ll need to run your business, so you can get a good picture of what you’ll need to spend a month.
5. Do you need an office?
Another important consideration when starting a business: where will you run it from? Decide if you’ll need an office. Whether that be a virtual business address (to project a professional image to your clients) or a fully serviced private office that you can bring clients to and work from.
Get all your options, so you can understand if there are opportunities for expanding your office space in the future should you need to, plus any flexible workspace solutions that may suit you (such as part time office rental or even coworking).
Being an ultra-flexible workspace provider, here at Wizu, we can help find a solution whatever you need. Discover our uplifting coworking and serviced office spaces or learn more about our virtual office options.
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