ACCORDING to the Federation of Small Businesses, at the start of 2014 in the UK there were an estimated 5.2 million businesses, which employed 25.2 million people, and had a combined turnover of over £3,500 billion.
So, what do you need to consider before getting started? If you were to assess every single legal aspect that was required to be put into place prior to setting up in business, most sensible people would choose not to bother! Regulation was a key feature of the political parties’ manifestos at the recent General Election as it continues to lay a heavy burden on all businesses.
ACCORDING to the Federation of Small Businesses, at the start of 2014 in the UK there were an estimated 5.2 million businesses, which employed 25.2 million people, and had a combined turnover of over £3,500 billion.
So, what do you need to consider before getting started? If you were to assess every single legal aspect that was required to be put into place prior to setting up in business, most sensible people would choose not to bother! Regulation was a key feature of the political parties’ manifestos at the recent General Election as it continues to lay a heavy burden on all businesses. However, trying to be sensible the priorities for setting up in business are:
* Your legal structure. Should you start up as a sole trader, or if there is more than one of you, in a traditional partnership or the more popular limited liability partnership? Or whether you are on your own or are in partnership with someone, should you be looking to form a limited company to trade from? All these structures have their pros and cons. The easiest and least regulated are sole tradership and traditional partnership. The most regulated, because of the limited liability status, are LLPs and limited companies. Tax is also a key consideration and an area subject to reform. The Conservative Government have promised to help companies to invest and grow by cutting corporation tax to 20 per cent for businesses making profit in excess of £300,000.
Conservative plans also target regulation, with the aim of cutting red tape by £10 billion in the next parliament to reduce the burden on businesses to allow for more growth, more jobs and hopefully more success.
* If you are going to employ someone in your business, then it will be essential to make sure that you are compliant with employment law. Professional advice, whether from an employment lawyer or an HR consultant will be vital. If you do not have the correct documents in place for your employees, then you can pay dearly for it at an industrial tribunal. As important as having the right documentation, is a basic understanding of what to do and what not to do in relation to dealing with your employees.
The best advice is to take advice before making a decision on how to tackle e.g. a poorly performing employee. Employment is another area that the Conservatives intend to reform. Key policies include to exempt new businesses from paying National Insurance on the first 10 employees for two years and to scrap it completely for those under 21 to help businesses ‘to give young people a start in life’.
* The premises you are looking to trade from could be anything from a spare bedroom in your house, to a unit in a start-up business centre, to a unit that has been built and is readily available in the market. Again, taking professional advice will be crucial. You would not want to become liable for expensive dilapidations and repairs on entering into a lease commitment for a building. It will be essential to take advice from a surveyor and a landlord and tenant lawyer who can advise how to minimise the risks. This early on in your business development, be wary of taking on a commitment for too long a term of years. Either if the business does not take off, or takes off very well indeed, you will be looking to move on sooner than your term of years ends.
* Other things to think about include setting up a robust set of terms and conditions of trading for your business, so that you can negotiate the best outcome if you have a problem. If you are originating ideas, you need to be thinking about how you can protect your intellectual property rights. Can something be patented or trademarked? Again, specialist advice will be vital.
Overall, most successful businesses recognise the need to take independent experienced professional advice, whether it be from HR consultants, accountants, bankers, lawyers or insurance specialists. There is plenty of advice available out there, so the best advice is to take advice.
For further information, contact Gerald Couldrake on 01604 258011 or email