The rise of the Internet has been a massive help to people looking for a more flexible way of working. It has enabled people to start their own business with very small overheads – whether you want to sell your handmade products, re-sell something mas-produced, or sell a skill, such as your design or computer programming know how.
Even if you are not actually selling online, the web makes it really easy to stay in touch with your customers via email, and order stock, stationery and necessities so much more quickly than ever before.
This is why so many working parents today have found themselves considering starting a business from home – you can stop what you’re doing to pick your child up from school, and work while the baby’s asleep. But, although we’re used to thinking of the Internet as quite an informal medium, it’s important to start by putting certain structures in place. Start small, sure, but lay the groundwork properly so that your empire can grow huge, not crumple before it’s begun.
Most importantly, make sure you have your legal and monetary affairs set up. A few key things to consider are:
Bank accounts: Do you need one? It seems to make sense to open a business bank account when you start your business. But did you know you are not legally obliged to? Business bank accounts will charge per transaction, even if they have a fee-free period to begin with. If you’re a sole trader and not banking megabucks initially, you can use your personal account with most banks. Check with your bank manager to see if you are allowed to do this. They may, very helpfully, set up a linked pot to put your business money in, because it’s useful to keep it all separate for accounting purposes. If you do choose to go with a business account, check the offers and charges carefully.
- Your company structure: Sole trader, partnership, LLP or Ltd? Unlike bank accounts, you need to decide on this question right away. What kind of company structure you choose will affect your legal status and how much tax you pay. Even if your company is tiny, you need to register with the tax office and after that you will file a tax return each year. Sole Trader is the simplest, and basically says that you’re running the company alone. A partnership is one up from that, and signifies that two people are responsible. An LLP gives a little more legal protection than either of the above, so if anything goes wrong and you have formed an LLP, it is your company that is sued and not you, personally. However, you need to complete more paperwork each year and this paperwork can be viewed by anyone who wishes to. Finally a Limited Company (Ltd) is a popular option because it can mean smaller tax and National Insurance bills. Consider each option carefully.
- Accountants: Can you do without one? Yes, is the short answer. This is where keeping your business money strictly separate from your personal finances has an advantage. You must save all the receipts for what you have spent on the business, whether that’s electronically or actual paper ones. Likewise, you must keep a record of your income. Once you have this information, it is relative simple to complete and submit the yearly accounts yourself.
That’s the basics sorted, now you can get on to the fun stuff – designing your logo, choosing website themes and building your business!