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Setting Up A Small Business
Are you thinking about to starting up your own business? If you are then you are not alone. More and more people want to become their own boss which is hardly surprising these days. The thought of not having to answer to anyone, working your own hours, making your own business decisions and working from home are just some of the reasons why you might want to start your own business. Also people start up business because they have a new idea or invention that they want to share with people and make a living out of their passion.
Setting up a new business in the United Kingdom is a relatively straightforward process. It is important that you understand any legal requirements for your business. Are you going to be a Ltd, a Partnership or an LLP, a Plc, or a Sole Trader? Do you understand the requirements of each type of organisation? If you don't, then you should do some research in these areas so you know what your getting your self into.
You may be wondering about VAT and whether you need to be registered to pay VAT. Some people set their business up and don't think about VAT until the businesses turnover over is close Â£70,000 per year. Once your companies turner is over Â£70,000 then you will be legal obliged to register to pay VAT (value added tax.) registered. Once you are VAT registered you must pay all the VAT you receive on your sales to the Inland Revenue. Also businesses can claim back any VAT from any purchases that have been made through the company.
Another aspect that needs to be sorted out is insurance. Every company that is set up in the United Kingdom is required by law to take out compulsory insurance. This insurance is to protect any employees, or anyone else involved in the event of a claim. You will also need to appoint a Company Secretary and at least one Director for the business. This is an obligatory legal requirement.
Another very import aspect of starting up a new business it finance. You should consider what the money will be used for and exactly how much you require. If you under fund your business, then it will fail. If you over fund your business, then any repayments you have to make could place a heavy burden on your profits.
Take the time to determine exactly what the money will be used for. If you have a business plan this should give you a very good idea how much business finance you will need to raise and what it will be used for. Some particular uses that entrepreneurs use available funds for are as follows:
â€¢ Building rental or mortgage.
â€¢ Production costs
â€¢ Sales cost.
â€¢ Purchasing fixed capital equipment or expansion project.
â€¢ Project development costs.
So how do you go about getting business finance? Well here are some of the options:
â€¢ Option 1: Your Life Savings
The first thing you should consider is your own savings.
â€¢ Option 2: Borrow from Friends and Family
After dipping into their own cash reserves, many entrepreneurs turn to friends and family for help.
â€¢ Option 3: Borrow from Credit Cards and Loans
This is a very expensive way to fund your business and you will pay over the top in interest charges. Unless your business takes off like a bat out of hell, you will be drowning in a quagmire of debt. If your business suffers a downturn, then there is no avenue left other than bankruptcy or an IVA.
â€¢ Option 4: Re-Mortgage or Second Mortgage
In today's market, bank loans are next to impossible to get if you don't have good security and an equally good track record of business success.
â€¢ Option 5: Grants
Grants from a variety of sources may be available to you. There is a lot of grant money available from a variety of sources and it is worth researching to see if there is anything about you or your business that could qualify for grant funding.
â€¢ Option 6: Business Angel or Private Investor
A business angel or private investor is typically a high net worth individual who invests in start up ventures for a share of the ownership or a better rate of return on their money than they would otherwise earn from a bank or other saving scheme.
â€¢ Option 8: Venture Capitalists
Venture capitalists typically get involved in larger funding efforts. Most venture capitalists do not get involved with any business for less than Â£500,000.00
There are loads of companies that offer Loans, Grants, Venture Capitalists or Business Angels. Do some investigations and find a good trust worthy company.
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