Starting your business
You’ve taken the plunge and decided to start trading. The first few months spent getting the business up and running are likely to be very hectic. So before getting the business off the ground, it pays to get all the necessary administrative chores out the way.
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Who do you need to notify about the new business? What legal status best suits your situation – sole trader or limited company? You need to decide early because if you need stationery it affects letterheads, invoices, etc. What about H M Revenue & Customs? Do you need to be registered for VAT? What insurances are required?
Depending on how you have chosen to structure your business, you will need to notify one or more of the relevant agencies. If in doubt, an ICAEW Chartered Accountant can clarify your obligations and help you to prepare the necessary paperwork.
If you have chosen to be a sole trader, you must notify HM Revenue and Customs (HMRC) within three months of starting your business.
Businesses that reach the threshold for compulsory VAT registration must notify HMRC (this threshold is revised every tax year). However, it can be advantageous to register even if you are below the threshold. To register for VAT you must notify HMRC. Depending upon the nature of your business and whether you are operating from a business premises, there may be other organisations you should notify, such as your local authority.
If you create a limited company you must inform Companies House, who will then notify HMRC. HMRC will send you a form that must be completed and returned within three months of issue.
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An ICAEW Chartered Accountant can help you to maintain accounting records that comply with the occasionally complex regulations that apply to even the most straightforward business activities.
Every business registered for VAT is required to maintain financial records that comply with the guidelines provided by HMRC. Similarly, it is a requirement of the Companies Act that every company should keep proper accounting records of money received and paid, of all sales and purchases, and of assets and liabilities. To find out more, go to www.businesslink.gov.uk
HMRC requires every business that employs staff to keep proper records for Pay As You Earn (PAYE) and for the calculation of tax liabilities. In some types of business, additional records have to be kept to satisfy government requirements.
If your records are inadequate in any of these areas, you may be storing up problems for the future. Your ICAEW Chartered Accountant will ensure that this does not happen.
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All businesses have to submit accounts to the tax authorities. Limited companies and limited liability partnerships also have to file annual accounts with the Registrar of Companies. These follow specific guidelines, so the assistance of an ICAEW Chartered Accountant will help you to navigate their complexities. VAT too, is an area in which expert advice and ongoing support will enable you to comply with the law while minimising stress.
If you employ staff, the payroll records must comply with HMRC regulations relating to Pay As You Earn (PAYE) and National Insurance Contributions (NIC). You are also required to meet a variety of Employment Law requirements such as the National Minimum Wage, Equal Pay, Holiday, Maternity Leave and Sickness Absence, as well as Redundancy. You must also comply with the requirements of the Data Protection Act (DPA).
Companies with a turnover of more than £6.5m are required by law to undertake an annual audit, carried out by a registered auditor. However, even when it is not a legal requirement, many businesses opt either for an annual audit or an assurance report because of the transparency and integrity demonstrated by an independent review of this kind.
Where legal matters are concerned, peace of mind is a priceless commodity. An ICAEW Chartered Accountant will know which records you are required to keep, help you to keep them properly, and ensure that they are filed with the relevant authorities at the right time.
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Whatever your field of business, insurance is essential, and the following insurances are compulsory:
- Employers’ liability compulsory insurance.
- Motor insurance – if your business uses vehicles on the road or other public places.
- Professional indemnity insurance for businesses in professions such as law and accountancy.
Other types of insurance commonly taken out by businesses include:
- All-risks buildings and contents insurance.
- Equipment insurance.
- Business interruption or business continuity insurance.
- Goods in transit cover.
- Credit insurance.
- Legal expenses insurance.
- Money policies covering cash, cheques and stamps.
- Travel insurance, if you or your employees travel abroad on business.
The urge to make cutbacks in ‘non-essential’ costs can place the value of insurance under the microscope. Whether or not you use a broker, it makes sense to consult an ICAEW Chartered Accountant with the knowledge to identify the ‘core cover’ you will need and to place your insurance costs in perspective.