A beginners' guide to starting a business in the UK: starting your own business can be an extremely challenging endeavour, especially in today's dog-eat-dog economic climate. To help you get started, our company formation experts here at Coddan Ltd have assembled the following guide. Designed to help you take that all important first step, our guide offers advice as well as access to useful information that will have you on your feet and up and running in no time. Should you need any further assistance, stop by our website at for more information on how to get your business started today.
Bravery: setting up your own business requires no small amount of courage. With as many as one out of every three UK business failing within the first year, going it alone is never easy. It can put strain on your personal life and, even worse, have a damaging, long-lasting effect on your financial health. With that in mind, it pays to listen to your common sense; research any investments thoroughly and make sure you have all the facts before you commit all your worldly resources to your new venture.
Capital: embarking on a new business venture without the necessary amount of cash is tantamount to tackling Mount Everest in a pair of shorts and sandals with both arms tied behind your back; in short, hard, if not downright impossible. When securing capital, look into taking out a loan or grant, many of which are available to start-ups and small businesses. UK Government, regional and local grants are available for certain industries. It is worth noting, however, that the process can be arduous, in some cases taking a lengthy amount of time to complete.
Dedication: look at what skills and experience you can draw on and take the time to consider how they can benefit your business. Knowing what is required in the day-to-day running of a business is half the battle - a business may look like simplicity itself to run from an outsider's perspective, but the reality is often very different. If the business you plan to start-up falls outside your usual sphere of expertise, ensure you take pains to research it thoroughly. It may even be worth considering work experience in the sector as way of gauging its suitability.
Serendipity: it goes without saying, but a little bit of luck can go a long way. Luck isn't something you can control, but you can make your own by ensuring you are prepared to make the most out of every opportunity that crosses your path.
If you're looking to set up a single member company in the UK, this is an exciting time for you as you embark on your new business venture. However, there is a lot that goes on behind the scenes of setting up your sole member company, and you can be forgiven for feeling a bit over whelmed. Here at Coddan, we are experts at limited company formation, and can ensure you complete all the necessary steps efficiently, quickly and affordable. Whether it's help with the necessary documentation, providing a registered office address, or setting up a company bank account, we can provide everything you need to start your UK business. With a variety of packages to suit your needs, see how we can help you with starting a business in the UK today. If you need an assistance with a starting business in UK, you can also speak to our business advisors between 9.30am-6.00pm Monday to Friday by telephoning + (0) 207.935.5171 or + (0) 330.808.0089 (national rates).
Every year thousands of people, fired with the entrepreneurial spirit, decide to take the plunge and start their own small business. They come from all backgrounds and ages. Their businesses are based on every conceivable idea from gardening and IT to child minding, consultancy and arts and crafts. The buzz of being your own boss has few equals.
While many of these businesses succeed, sadly some fail within a short time of starting, usually due to a lack of proper preparation and planning. If only they had been able to get some quality help and new business advice.
Why should you bother with the looking of useful information that might help you to start-up your business. Leave it to the professionals. So, if you thinking about starting your own business, or already started one, but looking to get some professional advise, why do not you ask Coddan for a help?
Coddan will be glad to provide you initial free ideas about how to form your business. All that you need to do is just to send us your e-mail enquiry to: firstname.lastname@example.org and you will receive an answer from our business consultants within 24 hours absolutely free and confidential.
Our firm has been establishing to provide the practical guidance and qualified assistance in starting and running a limited liability business within United Kingdom and offshore jurisdictions (BVI, Cyprus, Belize, Isle of Man IOM, Gibraltar, Mauritius, Guernsey, Jersey, Nevis, Panama,Hong Kong, etc.). Our web site summarises the procedures and costs associated with setting up a private limited company or register a public limited company in the United Kingdom, and international company formation in offshore countries.
We advise you on the most appropriate business legal entities formation & LLC incorporation to suit your individual or business circumstances, so that you do not need to spend your cost-effective time to research how-to register a company or guess with the different business registration options.
We have years of companies' formation experience behind us as companies registration agent, and we have established well respected name and reputation in starting a business.
Allow us to help you to establish a company and get it running; or to select the best type of businesses for incorporation, and register your general trading company, branch, place of business, joint-venture, subsidiary or a holding company in the UK or offshore country.
We may assist to register a right to manage, flats management company, intellectual property management, ship management, or charitable companies, clubs, or trusts.
Before to register a company online, you should conduct a company name search - our new company name search tool will help you check that the company name or trade mark you are thinking of using for your business is not already registered or similar to one already existing. Our company name checker directly searches the Companies House' database and checks the index of all UK live companies and those dissolved within the last 12 months.
If you will require further information about your business needs, pre-start stage and continues you can book an appointment with our business consultants in our office. It will be a bespoke service entirely for your benefits. You can discuss anything that concerns you and ask for advice on any aspect of starting and running a new business.
At any stage of your business activity, you can ask to speak with our specialists about specific questions which disturb your mind as a head of the business, such as bookkeeping, taxation or marketing for help to start your own business. All business advice meetings are on an appointment basis.
These meetings are usually taken between an hour and an hour and a half, but we can spend additional time, if it required for your business needs. We confirm your meetings, both by telephone and in writing and we suggest how you can prepare for the meetings so you can obtain the maximum benefit from them.
We also will require receiving from you the list of questions that you intend to discuss with our specialist, so we could be fully prepared for your meeting.
Coddan advise executives, full boards, board committees, non-executive directors, in-house counsel and institutional investors. Our advice covers a wide variety of matters including:
At Coddan, business specialists and consultants also can assist with the following queries and matters: -
Initial contact and dialogue may be by e-mail. At some point in the dialog, it may be decided that telephone or office consultation will be beneficial. To apply for a consultation, please complete an online questionnaire below, we will then arrange a private consultation with one of our consultants. An initial consultation with a private consultant costs between £45.00 and £125.00, please note that our senior advisors charge £150.00 per hour.
There are four principal legal forms that a general business might take:
Sole Trader (Self-Employed)
The simplest structure, but carrying unlimited liability for the owner. Most people who start in business do so as sole traders. They work on their own. They alone receive the income and are liable for any debts.
However, with that comes danger. You're totally liable for any debts that you incur, because the business is, quite simply, you. The financial costs of starting up are minimised by working alone from home. It can be a lonely life but, instead of colleagues, you have customers.
To become a sole trader, you will need to:
Once you have registered, you will become responsible for the following:
Relatively simple but inflexible. Limited partnerships they are very rare today and account for less than 1.2% of all partnerships in the UK. A limited partnership is formed when one or more of the partners invest capital into the business but do not participate in running and managing the business. These partners therefore have limited liability as they can only lose the amount of money that they initially invested into the business.
Limited Liability Partnership
An LLP formation is similar in some ways to a limited partnership, except that the individual members have lower liabilities to any debts which may arise from running the business. Limited liability partnerships they are not rare today and account for less than 11.2% of all partnerships in the UK. There are more administrative duties involved compared to the partnership business structure. In fact, a limited liability partnership is more similar to operating a limited company.
In terms of liability, the limited liability partnership is itself liable for debts run up in running the business, rather that the individual members of the limited liability partnership. As a result, limited liability partnerships are only recommended for profit running businesses.
To set up a partnership, you will need to:
Once you have registered, you will become responsible for the following:
As a limited liability partnership, you will not be responsible for your business' losses.
The business is registered with Companies House and is an entity of its own. There are more rules associated with running a business this way but there may be tax advantages. Those involved have shares in the business proportional to their involvement. A limited company is regarded in law as a separate legal personality, distinct from its shareholders.
So, you can be a sole trader, a limited partnership, limited liability partnership (LLP), a private limited company - the choice is yours. However, before you begin trading, you need to decide which legal form of business is best for you.
The decision will affect the way you are taxed and accounting records you will have to keep. Even if you are going to work on your own from home, think about whether might be advantages in forming a limited liability partnership or a limited company.
Private Limited Companies
This is generally the best legal form for general business companies to use. Limited companies are cheap and easy to set up and they protect the directors by limiting their liability for any debts run up by the company to the amount that they have invested in it. However, this protection is removed if any director acts in any way that is unlawful, negligent or not in the best interests of the company (i.e. in the best interests of the shareholders on an ongoing basis).
The directors are also liable if the company continues to trade beyond the point when it can reasonably expect to meet its outstanding liabilities. In this situation, the directors are personally responsible for any additional liabilities incurred after the company has reached this point.
When creating a limited company, directors must be clear about their individual rights and responsibilities; the rights and responsibilities of their fellow directors; the fundamental issues that will need the unanimous agreement of all directors; and the procedures that will be put in place for resolving any disputes. Directors should make sure that they are familiar with the company's internal rules and procedures and that they read all documents (e.g. minutes of board meetings) carefully before signing them.
Being a director of a limited company carries a number of additional responsibilities. Companies are obliged to prepare annual accounts and file a copy with Companies House. Company law requires that certain information appears on all correspondence issued by the company.
Get help from Coddan to understand what type of business entity will be much suitable for your current business needs and requirements.
Self Employment vs LTD
As many know, employees have rights on how many hours a week they must work on average. Most employees do not work more than forty-eight hours a week and receive overtime pay for additional hours put in. When self-employed, however, these rules do not apply. A self-employed person could work seventy hours a week, if that is what is needed, and would get paid no overtime or nothing else additional. Because they work for themselves, their wages depend on what they bring in.
Another responsibility that is given to the self-employed is taxing their income. A self-employed person must allot for his or her own tax payments and follow the guidelines set by the government. Normal employees depend on their employers to do this task for them and are not required to worry about this.
Being a sole-trader LTD company also protects your personal assets should you business get into financial difficulty. If you're starting out a capital is restricted and you expect to earn under £20,000 then it may worth sticking to being self employed and then move over to being a LTD company when have more money available to you. Typically self employed people get a bad deal with getting competitive mortgages. The reasons why are obvious; to the lender they are a risk, an unknown quantity.
Find out the links below on the pros and cons of registering your business: -
1. Liability is, in the vast majority of cases, strictly limited to the investments made by the shareholders.
2. Company officers are not personally liable for their actions unless there is a clear and serious breach of their fiduciary duty.
3. Limited companies often benefit from greater prestige than their sole proprietorship or partnership counterparts. The reason is because such an enterprise normally requires more planning and thus is deemed more credible.
4. Limited companies often benefit from significant tax advantages. In fact, many countries around the world give exclusive tax incentives to this type of entity.
5. The rights of shareholders are normally clearly defined and protected.
6. Corporate taxes only become payable after the end of the financial year. This means money that would otherwise be taxed on a monthly or quarterly basis, is available to earn further interest before the final payment of tax.
7. You need only appoint one director, and one shareholder. Appointment of a company secretary is optional from April, 2008.
8. Directors, secretary and shareholders can be of any nationality.
9. After a company is registered, there are no obligations for it to start trading within a specified time period.
10. A company is overseas resident if its management and control abide outside the UK. Non-resident companies are generally exempt from tax on capital gains.
With extensive experience in product development, procurement, sourcing and product/brand marketing, gained in both retail and supply chain, in the UK and internationally, we have an in depth knowledge of the consumer goods process, from concept to customer service. Although this seems a very broad range of talents, they have all developed from a core starting competence of retail buying/category management. The following businesses are just some of these which need special licenses to trade: -
You will need to keep records for your own sake, but you must also keep them by law to support your VAT, other tax and National Insurance contribution payments and claims. If you are a limited company or an LLP, there are further conditions to do with your annual reports and annual accounts. In the case of companies, there are also condition concerning records of board meeting and transactions in your company's shares.
In you are a sole trader or a partner, the tax rules are different but you still need to produce completed financial records. Please do not hesitate to use Coddan's accounting department to help you with your accountancy and tax questions.
If you plan to keep any information about people electronically, for example on a personal computer, you must notify the Information Commissioner under the Data Protection Act 1998. Under this Act, computer users must follow eight Data Protection principles for using computers.
The Data Protection Act has also been extended to certain manual records. The Data Protection Act will affect many aspects of your business and you should obtain professional advice on these implications in your precise business circumstances.
The 1998 Data Protection Act significantly changed the use of customer data. Paper records must now comply, as well as computerised records. Companies must be open about how they use data and must follow sound information-handling practice. The Act gives every individual access to information held about themselves. All data users must register with the Data Protection Registrar and comply with the principles of the Act.
Companies should use customer data to benefit customers. Many simply hold data without using it. The issue of regulation for the Internet is a difficult one.
Companies must ensure the data they hold is accurate and up to date. Get customers' permission before passing data or continuing to contact them. Reassure customers that you treat their data with the highest levels of confidentiality. Use data, within the spirit of the Act, to contact customers with information that you believe may be of interest to them. Make it easy for customers to respond or change their details.
Understanding the Data Protection
Data protection is a legal requirement for all employers. But do you really understand what it means? Data held on computers is governed by the Data Protection Act 1998. The Act puts in place eight principles to make sure that your information is handled properly. These principles require that data must be:
By law data controllers (the person nominated by a business to manage data on its behalf) have to keep to these principles. These principles put a significant obligation onto business. They require that information stored on computerised records (this includes databases, email records, electronic documents and other electronic communications and may cover personnel records, minutes and other sensitive information) must be accurate, kept only for a specific purpose and for a specific period of time, and importantly, that information be kept secure.
Data Protection Act FAQs
How do I know if my data has to comply with the Act? - Even if you only hold a small number of customer names and addresses, they constitute data under the terms of the Act. If in doubt, check.
My company is part of a larger group, can I pass customer data to other companies in the group? - You should ask the customer's permission before passing data to any other parties, even internal ones.
How long can I hold data on a customer? The Act does not specify a time limit, but recommends that it should not be held longer than necessary. It is in the spirit of the Act that you should not just hold data, but should use it to benefit the customer, for example, by providing them with information that you believe is useful.
What happens if data is inaccurate? According to the Act, data must be accurate and up to date. That puts the onus on you to maintain it properly and check with customers that it is accurate.
Making It Happen
Check all your records - the use of customer data changed significantly when the 1998 Data Protection Act came into force. The 1994 Act only covered data held electronically which could be processed on a computer. However, the 1998 version included paper records.
Paper records must comply - in theory this means that if you have a box of file cards with names and addresses, you should register that information with the Data Protection Registrar (DPR). Many sales and customer service teams still use this type of filing, even in relatively large companies.
Use data properly - the basic premise behind the Data Protection Act is: if you have data, use it properly. The Act works in two ways: -
Register your business for the data protection - under the Data Protection Act, all data users must register with the DPR. Once registered, users must comply with the principles contained in the Act. They must: -
Use customer data to benefit customers - not all companies comply with the spirit of the Act. According to research, some of the organisations holding most data, particularly in financial services, don't seem to use it at all, resulting in poor communications with customers. Many companies have simply been collecting data and not really putting it to good effect.
The data is itself very valuable, but customers may feel that they have handed over a great deal of information on their lives without seeing any benefit. The issue of data collection becomes even more complicated with the growth of the Internet. Not only will data collection be faster; consumers will expect higher levels of service than ever.
Be aware of Internet data - the issue of regulation for the Internet is a difficult one. The World Wide Web is based on principles of freely available information on a worldwide scale. However, consumers need to be protected so that they can use the Internet with confidence.
Check data accuracy - recent changes to the Data Protection Act mean that companies must ensure the data they hold is accurate and up to date. As part of your commitment to customer service, you should aim to offer customers useful and timely information that meets their individual requirements. To do this you might hold contact details, together with information on customers' personal interests which they have provided in the past. Because circumstances change, make sure that you have your customers' correct details and check that they are happy for the company to continue to contact them.
Customers have a right under the Data Protection Act to ask for a copy of the information you hold on them and to have any inaccuracies corrected.
Get the customer's permission - ask customers to let you know if they do not wish you to give this information to other parties. Tell them that you would like to continue contacting them. However, if the customer prefers you not to, ask them to let you know. If they do not reply within a specified time frame, tell them that you will assume that it is okay to continue contacting them.
Reassure customers about Data - customers should be assured that you treat their data with the highest levels of confidentiality. You should not disclose their information, without their consent, to third parties, any party within your own organisation, dealers or other organisations acting on your behalf.
Use the information to maintain contact - if you have data, you can use it-within the spirit of the Act-to contact customers with information about products and services that you believe may be of interest to them. You can also use the information for marketing, research or sales tracking purposes. Customer names and addresses may also be used to process orders and maintain accounts with the company or its dealers.
Make it easy for customers to respond - allow customers to respond to requests for permission or change of details by post, fax or e-mail. Let them know that they should reply if they would like you to stop contacting them, or if they want to change contact details. Provide a helpline that customers can call if they need any further information on your data policy or on the data you hold.
Storing data and not using it - the Act says that you should not hold data for longer than necessary. Consumer attitudes say that they should see some recognisable benefit for providing the information. Using inaccurate data - the onus is on the company to ensure that data is accurate. This means contacting customers to ensure that information is up to date and accurate.
Failing to register data - the 1998 version of the Act widened the scope of data protection to include paper records. Even small organisations with apparently simple customer records must comply. Making it difficult for customers to respond - the Act says that you must give customers access to any data you hold on them. That means you must make it easy for customers to contact you.
At first you may be able to run your business by yourself, if not, or as your business expands, you may need to employ people. If you do need recruit employees, you should know you responsibilities as an employer. Every employee, whose employment continues for one month or more, has the rights to receive written statement setting out certain details of the employment. This should be provided no later than two month after their employment starts.
If you send HM Revenue & Customs your Employer Annual Return (or part of your return) on paper or magnetic media, when you're required to file online, you may be charged a penalty. The precise amount of the penalty depends on the number of P14s included in your return and is up to a maximum of £3,000. Contact us to see how we can assist you.
This statement must include the following details:
All employees are entitled to receive a statement of their terms and conditions of employment, whether or not that is in the form of a formal contract, a letter of appointment or any other written form. If the employer only uses a letter of appointment, rather than a formal contract, however, the courts may imply contractual terms. It is always better, therefore, to issue a formal contract to all employees.
The content of the statement of employment must include:
Generally, when recruiting an employee, it is a illegal to discriminate on the ground of race, sex, disability and marital status, however there are certain limited exceptions. The anti-discrimination law continue to apply to all other parts of an employee's job, including wages and holiday entitlement after the recruitment process, Your business could be held liable for any discrimination of if you are trading as an individual you are trading as individual you could be personally liable foe discriminatory actions.
If you employ anybody, either full time or part time, you are responsible for deducting income tax and National Insurance Contributions (NICs) from their wages, and you must also pay the employer's share of the NICs. If you are not sure about the NICs, always consult with the Inland Revenue. There are different tax and National Insurance rules depending on you circumstances.
When you take on someone you need to tell your local tax office. They will send you document which show you how much you need to take out of each employee's wages earning and where to send the money (Value Added Tax). You must record each employee's earning and tax and National Insurance Contributions and tell your local tax office about these amounts every year.
In the case of National Insurance, the contributions for your employee will be in two parts. You must pay one part and your employee must pay the other. These contributions depends on how much you pay your employee. The Inland Revenue will collect them at same time as they collect any tax. Inland Revenue office or Coddan Accounting team will be able to give you more advise on the National Insurance. Please feel free to ask.
Your own National Insurance depends on your circumstances. If you are company director you will be treated in a similar way to your employees. You will be classed as an employee of your company and will pay contributions in the same way as your employees but, there is a special way to access director's National Insurance. You can get assistance in the local Inland Revenue office, or ask Coddan for help.
If you are sole trader, partner or member of an LLP you will need to contact Inland Revenue to get more information about your tax liability. You choose wherever to pay your National Insurance contributions every month by direct debit from your bank account, or every three month when you will receive a bill. Your contributions will be charged at the same rate each week. You may also have to pay an extra contribution or any profit your business makes. This is assessed and collected along with your income tax.
You must make sure that, as far as is reasonably, the health, safety and welfare of your employees is a not at risk whilst they are at work. You may contact your local health and Safety Executive for advice and information which will help you set up important safe legal working conditions for employees.
It is illegal to refuse a person employment because he or she is or is not a member of a trade union. You should know various law which protect employee's rights to choose whether to join a trade union.
We hope you will never have to take such a drastic step, but if you do, you must have a valid reason for dismissal and you must act reasonably and follow procedures. Unless the dismissal is for gloss misconduct, you must give employee notice of dismissal as set out in their contract. Failure to give proper notice may lead to a wrongful dismissal claim.
One alternative to employing directly is to sub-contract some work. This may be more cost effective in ironing out short-term trading highs and laws, night alternative some of the responsibilities of an employer. However legal responsibilities can arise in this respect, for example under the Transfer of Undertakings (Protection of Employment) regulations 1981.
As an employer, it is essential you know about the following issues and how the law deals with them
You can get leaflets on the issues above from the Department of Trade and Industry, Advisory Conciliation and Arbitration Service of the Department of Social Security. The law in these areas change frequently and, you should know about the following current employment laws: