BUSINESS START-UP

It is the ambition of many people to run their own business. Some may have been made redundant and find themselves with free time and financial resources. Others make the decision to start up in business to be more independent and obtain the full financial reward for their efforts.

Whatever the reason, a number of dangers exist. Probably the greatest concern is the possibility of business failure.

There are a number of the factors which need to be considered before trading begins some of which are detailed here however, every business is different and at Campbell Dallas we will take into account your individual needs and apply these to your business.

Initial Considerations
In order to make your business a success there are a number of key factors which should be considered:

• commitment - starting a business is demanding. Determination and enthusiasm are essential
• skills - you will need managerial, financial, technical and marketing skills. If you do not have these skills personally, they can be found in a partner or employee, or acquired through training
• your product or service should have a proven or tested market, but must not conflict with the patent or rights of an existing business.

In addition to these general considerations there are a number of more specific matters.

The Business Plan
The business plan is the key to success. If you need finance, no bank manager will lend money without a sensible plan.

Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results. We will guide and help you to write a suitable business plan.

Business Structure
There are three common types of business structure:

• Sole trader

This is the simplest form of business since it can be established without legal formality. However, the business of a sole trader is not distinguished from the proprietor's personal affairs.

• Partnership

A partnership is similar in nature to a sole trader but because more people are involved it is advisable to draw up a written agreement and for all partners to be aware of the terms of the partnership. Again the business and personal affairs of the partners are not legally separate. A more recent development has been the possibility of using what is known as a Limited Liability Partnership (LLP).

• Company

The business affairs are separate from the personal affairs of the owners, but there are legal regulations to comply with.

The appropriate structure will depend on a number of factors, including consideration of taxation implications, the legal entity, ownership and liability. Every business is different and we will advise you on the most appropriate structure for your business needs.

Raising Finance
Every business from its commencement and through its development and growth will need finance.
But what type of finance is best suited to the development of your business, and who should you approach for funding?

We provide guidance below on types of finance available and outline the planning required before approaching any lending institution. Our experienced Corporate Finance team will guide and assist you in negotiation of finance and any grants that may be available to you.

Business Stationery
There are minimum requirements for the contents of business stationery which will depend on the type of business structure.

Books and Records
All businesses need to keep records. They can be maintained by hand or may be computerised but should contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you are considering purchasing a computer software package to maintain your records please speak to us for advice.

We provide key services to many of our clients including Book Keeping, Payroll and Company Secretarial Services.

Accounts
The books and records are used to produce the accounts. If the records are well kept it will be easier to put together the accounts. Accounts must be prepared for the Revenue and if a company is formed there are strict legal requirements as to their format.

A company and a LLP may need to have an audit and will need to make the accounts public by filing them at Companies House within a strict time limit.

Taxation
When starting in business, taxation aspects must be considered.

• Taxation on profits

The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances.

• National insurance (NI)

The rates of NI contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. But in a company, it may be possible to avoid NI by paying dividends rather than salary.

• Value added tax (VAT)

Correctly accounting for VAT is an essential part of any business and neglect may result in a significant loss. When starting a business you should consider the need to register for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register. Expect a visit from Customs & Excise within eighteen months of registration. This inspection of your records ensures VAT is being properly accounted for.

Employing Others
For the business to get off the ground or to enable expansion, it may be necessary to employ staff.
It is the employer's responsibility to deduct income tax and national insurance, as well as paying over tax credits to employees and accounting for student loan deductions. The balance must then be paid over to the Revenue. Payroll records should be carefully maintained. You will also need to be familiar with employment law.

Premises
There are many pitfalls to be avoided in choosing a property. Consideration should be given to the following:

• suitability for the purpose
• compliance with legal regulations
• local bylaws
• physical restrictions such as access.

Insurance
Comprehensive insurance for business motor vehicles and employer's liability insurance are a legal requirement. Other types of insurance such as public liability, consequential loss, business assets, Keyman and bad debts should be considered.

Pensions
Putting money into a pension scheme can be a very attractive way of saving for retirement because of the favourable tax rules. Many companies have to provide access for their employees to a stakeholder pension.

WHO TO CONTACT
Should you require advice on any of the above please contact
ROY HOGG: telephone: 01786 460030 email: roy.hogg@campbelldallas.co.uk