Considerations for startups

Are You a Startup?

Here are some considerations to think about

As the owner of a relatively new business myself, I know what it is like to have a huge ‘to do’ list in front of you and as an accountant I get asked a lot of similar questions from my clients starting on their own journeys.

Each business or venture is different and will have its own needs or specialist requirements, but if you have made the leap and want to check you are on the right track, or if you are thinking about making the first steps into starting a new business, here are five things to consider to get you started:-

Five Things to consider when starting any venture

1.What to do first?

You have already done it, you have decided to start up your own business, and probably starting incurring costs in setting it up. Now what you need to do is record those costs.

All too often I hear ‘I have started my business and I need you to do my accounts, what costs can I include?’

My answer is – if I am checking them, include EVERYTHING! It is true that not all costs are allowable for a trading business, but it is so much better to include everything, and let your advisor tell you it is not allowed, than to err on the side of caution and find out that you haven’t included a regular essential cost, such as communications or travel because you didn’t know.

Also start recording them now. When filing accounts and returns in say 18 months time, there will be costs going through the bank which you simply won’t remember, or will spend hours trying to find because it was misfiled. Record them now on whichever format you prefer and you will save hours and headaches later.

2. Who do I tell?

An often asked question, and the short answer is – It depends.

You may have decided to register your business, in which case the relevant authorities will know already, if you are going to be sole trader or unregistered partnership, then you just need to let the HMRC know so that they can issue you with a UTR, for either yourself or your business.

Whether you should be registered or self employed is a good question, and one I have addressed previously – Self Assessment Statement

To help you with deciding whether to become a registered company or not here is a small comparison to give you an idea:-

If you think you are going to turnover more than £85,000 in the next 12 month period, you will have to register for VAT and you should advise the HMRC of this now. Please let us know if you would like to know more about this.

3. Systems

Another question I am often asked, is ‘what systems do I need to set up?’ and again the answer varies depending on what type of business you are running.

Generally it depends on what you are comfortable using or may want to incorporate into your business. The new online ‘Cloud’ based software for stock control, bookkeeping and invoicing are very useful if you are trading online and are able to work with them. It is worth noting though that despite the advertisements they do not do everything for you and you still need to know how to use them and input the data. The rule is rubbish in rubbish out.

If you have a more traditional business and are turning over very small amounts to begin with, there is nothing wrong with an excel spreadsheet or even a manual book!

As long as you keep whatever you are using up to date and accurate, your accountant or advisor will be able to help you extract the data as at the year end.

Location

You may not have thought of this, but it is quite important. You want to be where your clients can see you, whether it is on the right online platforms, at the trade shows and events that they would attend or even advertising in the magazines that they would read.

If you are not actually located where you would like to be, it is worth exploring the use of a mailbox, or dropbox location so that you have a good business location to advertise even if you actually work from home – as so many of us are doing nowadays.

Legal considerations

Lastly it is worth thinking about the legal and technical implications of what you are doing and it is always worth having a chat with somebody who knows about it and who would be able to help you with any potential complications.

It doesn’t have to be something as heavy duty as employee contracts for new members of staff, but something as simple as making sure that your website is unique and not infringing on anyone else’s copyright, or making sure that your computer is backed up and essential data won’t be lost.

You are Jumping into the unknown – But you are not alone

With the new surge in online networking and group networking for small businesses over the last year, access to people willing to help and assist in any area of your business is arguably easier than any time in the past, and the amount of new businesses set up in 2020 is the higher than in any previous years according to the Companies House statistics, so you might feel that you are jumping into the unknown, but there are plenty of us who have been there ahead of you.

>If you want to discuss any of the points raised or have questions about your start up let us know and we can help you take that first step.

Ella M Doherty FCCA