SETTING UP: When it comes to career options, few are as rewarding as starting up your own business.
That said, working for yourself and becoming self-employed is also a real challenge. But, there is no shortage of help and advice available.
When you set up a business you can get expert help with planning and specialist training courses.
Note: In some cases you will need licences and business insurance.
This section explains how to get reliefs and benefits when you first set up a company. But, we recommend you get professional advice if you need funding for any start-up costs. The Prince’s Trust offers financial support through The Enterprise Program.
So the essential question has to be: What do you need to do to set up a business? In short, it all depends on three main factors. What type of business you are starting, where you are working, and do you need to take on staff to help you?
How to Register a Business?
There are various possibilities for registering a business and ways of being self-employed:
- You can choose to work alone as a sole trader.
- Working in a partnership means you have two or more people sharing the legalities.
- Trading as a limited company means the business has a separate identity.
- You could own a business franchise which means the trading company is already set up for you.
Sole Trader Business
As a rule, the process to set up as a sole trader is simple and quick. But, sole traders are personally responsible for any debts associated with their business. That means, working as a sole trader incurs some bookkeeping and accounting responsibilities.
Limited Company
Forming a limited company means its finances would be separate from your personal ones. But, it would increase your reporting and management responsibilities. That can put many people off setting up limited companies.
You can set up a private limited company yourself in the United Kingdom. That said, in most cases you will need help and advice from a professional accountant.
Business Partnership
Starting a partnership business is a simple way for 2 or more people to run it together. In this case, all partners would share the responsibility of any company debts. You will also have accounting responsibilities like those of sole trader businesses.
Note: If you set up a business partnership the partners would ‘personally’ share responsibility for the operation.
Rules for Different Business Setups
The kind of responsibilities you have depend most on what the business does. In some cases you will need:
- Certain licences or special permits (e.g. to sell food, play music, or to trade in the street).
- Appropriate business insurance (e.g. contents and Employers’ Liability insurance).
Other rules for different business setups include situations where you are:
- Selling goods via the Internet (e.g. online and distance selling).
- Buy your goods from overseas or sell your goods abroad.
- Storing business data or use personal information.
How to Choose the Right Legal Structure
The Place You Work From
When you set up a business, you must check what other responsibilities you may have in cases whereby:
- You are running a business from home.
- You have tenant responsibilities when renting a business property.
As a rule, you must pay business rates when you rent or buy a property for running day-to-day operations. But, when you start up a small business operation you can apply for small business rate relief. In fact, some startup businesses may pay no rates at all.
Note: Check to see whether you would be able to claim expenses if you’re self-employed for any equipment, the office, or a property.
Rules for Taking on People to Help
There will be extra obligations if you take on agency workers or freelancers to help. You would also be responsible for taking care of their workplace health and safety.
If You Become an Employer
When you start employing staff for the first time there will be other things to take care of. You need to carry out certain obligations to avoid breaking employment rules and regulations.
As a rule, some of the extra responsibilities and obligations you might have could include:
- Running a staff payroll system.
- Paying employee National Insurance (you may qualify for claiming an employment allowance).
- Providing statutory workplace pensions to any staff who qualify.
Further Help When You Set Up a Business
Where can you get further help with setting up a business in the UK? The government website provides details via a business support helpline page. If you are working after State Pension age you may need to pay tax on it.