14 Apr Your Business Journey: Part 1 – The Start Up
‘Working from home’ and ‘furlough’ may be the growing discourse of working life in the past year, however, trends suggest there is another trend that emerged well before the beginning of the COVID-19 pandemic.
Self-employment has been rising over the past decade. In 2019 alone, 14% of the workforce was self-employed. Whilst this may not seem like many, the fact that ‘solo-self-employment’ has accounted for a third of all employment growth since the financial crisis of 2008 proves that this career option is here to stay.
Three lockdowns later, circumstances toward becoming self-employed or starting a new business, due to the amount of people who have been made redundant or are trying to make some extra cash while being furlough, has accelerated.
A survey of over 1000 recent graduates from Prospects revealed that 29% lost their graduate jobs and another 26% lost a pre-planned work placement or internship.
This cocktail of circumstances has therefore created a working world where creating your own entrepreneurship looks far more enticing.
What are the first steps to business?
The first step in creating your own business is choosing the right structure. It is worth spending time at this stage gaining advice from professionals who can ensure your set up is correct from the start. There are three main types of structure in the UK, and it is crucial that you understand the tax, accountancy and liability implications for which ever route you choose.
Sole Trader
- Simplest and easiest to register
- You are your own boss and sole owner of the company
- You are entitled to keep all the profits as income
- You must pay tax and national insurance through the Self-Assessment Tax Return
- You are responsible for all liabilities which includes personal assets
- Unlimited liability
Partnership
- Involves two or more individuals who agree to share profits or losses of the business
- You are referred as ‘unincorporated entities’ with partners being self-employed
- You must share profits and losses based on an agreed profit-sharing ratio, with each partner paying tax on their share of the profits
- Unlimited Liability
Limited Company
- This is a privately managed business, owned by shareholders and run by its own directors
- The company is therefore responsible for all its finances, which are separate to its owners’ personal finances
- Profits produced are retained by the company
- Profits can only be distributed to shareholders in the form of dividends, after Corporation Tax is paid
Our team at Douglas Home & Co can discuss the best option for you. We take pride in ensuring you have a clear understanding of the pros and cons of your chosen business structure. From there we can help you to register with HMRC Companies House and make sure you are registered for VAT and any payroll services you may require.
Tracking your income and expenses.
Bookkeeping is the regular recording of a company’s financial transactions. It’s therefore of high importance as bookkeeping allows companies to assess their own performance, with a company subsequently being able to create revenue and income goals.
While this job may seem daunting at first, the Douglas Home & Co team can recommend online software such as Xero. We can also provide training to make sure this is all set up correctly from day one, making bookkeeping simpler and let you rest assured that it is all under control.
If your company continues to expand, you may wish to look toward a company like Douglas Home & Co to manage this for you, rather than spending lengthy amounts of time on it yourself.
Find out more today.
Self-employment, and business creation, can sometimes be daunting at the very early stages, however with the right professional guidance you can get started knowing your accounts and tax planning is under control.
If you are looking to set up a company or if you are in your first two years of business and are simply wanting peace of mind that your set up is all in good order, you can visit the Douglas Home & Co website www.dhco.co.uk, call the team on 01573 225082 or email mail@dhco.co.uk to book a consultation today.