Although this post is not directly focused on digital marketing, a lot of the conversations I’ve had in the past few weeks have been around setting up a limited company. Many of us have been there, should we do it, what are the advantages / disadvantages, etc. In the post, I’m going to outline my three top tips with regards to setting up a limited company:
1. Start up as a sole trader
Why? Starting up a sole trader is very straightforward and simply requires you to inform HMRC and keep simple business records, e.g. records of income and expenditure, receipts, invoices, etc. This gives you the opportunity to gauge the market and most importantly see what opportunities are out there. As opposed to setting up a limited company, there’s less admin to do (basic bookkeeping) so no real need for an accountant. Once things start moving and you’ve started trading, then comes the need to think about setting up a limited company. This requires going through Companies House (or a company formation company), giving your company a unique name (e.g. not already registered with Companies House), getting yourself an accountant (unless you know what you’re doing with tax returns, corporation tax, etc.) and a business bank account. The initial costs of setting up a limited company can be seen as a disadvantage (assuming you’ve started trading, it shouldn’t be too bad) but there are distinct advantages, such as having your own company name (which looks more professional no doubt) and the fact that the business is its own entity (e.g. you are not personally liable for it).
2. Keep your costs low
As great as it is to have an all singing and all dancing company – can you really afford it and do you actually need it (yet)? Do you need to rent offices? Do you need a landline phone number? It’s important to go by your means (especially at the start) – whilst taking into account the industry you’re in. In some industries, having a registered location in town and a landline phone number may be considered business critical, but in most cases, I don’t think it really matters. It’s just a means to an end for now, so it’s important you don’t cripple yourself with expenses before you even really get going. Additionally, do you need a swanky logo? It may look nice and you can show it off to your friends and family, but it’s not really going to win you business – although having a website could, as it effectively operates as a shop window. When it comes to design and functionality, remember KISS (Keep It Simple, Stupid) – in most cases, less is more. As mentioned previously, you’ll need to get yourself a business bank account – to my knowledge Santander and Barclays have good offers where you can usually get the account for free for at least twelve months or so.lo
3. Get yourself a good accountant
A good accountant is an accountant that gives you the time you need and thoroughly answers all of your questions in a timely manner. As time goes on, you’ll most likely find you need less of your accountant’s time and have less questions as your knowledge continually grows. I personally found the way to get yourself a good accountant is to simply ask around – especially those you know who are in a similar situation to yourself. Most importantly, aside from being experienced in the field, a good accountant will help to cover the financial / taxation side of the business whilst you manage the rest. The cost of this should pay for itself in terms of the time saved and guidance given, so in effect, is an exception to the second point in this post. Furthermore, a good accountant will help you with tax efficiency, ensuring you are paying the right amount of taxes – something that can be easily overlooked, meaning you end up paying out more than you should be.
Before you ‘make the plunge’, I’d recommend you do as much research as possible, especially as there’s some great resources out there, such as Start Up Donut, but hopefully my top three tips will help you on your way to successfully starting up your business. As always, feel free to get in touch to talk through where you are in your journey.