Starting a business - what do I need to do?

jools002

Hi all,

I would like to start my own business working from home, however, I have no idea what I need to do to comply with the law, i.e do I need to register my business and if so, how do I go about it? What do I have to do regarding tax and National Insurance? All I know is that I need my Mortgage lender's permission and insurance. It will be a furniture restoration business if that's of any relevance.

Thanks for any help.

Kieran_Lovegrove

You probably want to see a business start-up advisor (which can be free, especially if you're young - under 30, usually, check the Prince's Trust or look at BusinessLink.gov.uk).

You have two options. You can become self-employed, in which case you just need to register with HMRC as self-employed (and for self-assessment tax). You'll then pay Class 2 NICs (usually by direct debit, about £10 a week) and then you'll need to keep cash aside for income tax and the rest of your NICs - HMRC can tell you what you'll need to pay and when.

The alternative is to incorporate a company. This gives you limited liability (you can't be held liable for the business' debts - unless you sign personal securities over to your creditors, which can be required of small businesses for loans, etc). There's much more paperwork involved, but if you expect to make over around £30,000 per year, it's going to be much more tax efficient.

In either case, you'll want to get a business bank account opened. Partly because your bank's terms and conditions will state that you can't use a personal account for business, but more importantly, you'll need to keep track of your income and expenditure and having a separate bank account is much easier. You need to decide whether to go down the self-employment or incorporation route before opening your account (you'll need to know when you apply).

sequence

By far the important thing you need to do first is figure out how you're going to make money from it, and if it will be worthwhile The rest of it is plain sailing.

trailingspouse

Reasearch, research, and more research - find out about business banking, merchant services, insurance, marketing and advertising, bookkeeping. Check out other people doing the same work in your area - is there room in the market for another one? Do they look like they're making money? Will you pick up/deliver furniture - you'll need a van. If you're working from home do you have space for clients to park, will the neighbours object to noise/smells (I don't know much about furniture restoration, but I'm thinking hammering, sawing late into the night to get an order completed?) waste disposal (do you use solvents?). Talk to your planning dept to see if you need planning permission.

Honestly, doing the work will be the easy bit!!