New research reveals that the average age that Brits decide to set up their own business is 27...
When forming a business make sure you get it right from the start. Check the key considerations and legal requirements to prevent expensive mistakes.
- Involve professional advisers (eg an accountant) from the outset.
- Consider whether you will be in sole control of the business or will share ownership or involve external investors.
- Consider whether a company or limited liability partnership (LLP) will offer worthwhile financial flexibility, protection of personal assets and credibility with customers, suppliers and lenders.
- Consider whether the administrative burden and costs, and the disclosure requirements, of a company or limited liability partnership will be justified.
- Investigate the likely effect of different business forms on your tax and National Insurance position.
- Choose the most appropriate business form: sole trader, partnership, LLP or limited company.
- Draw up an agreement with the key individuals involved covering, for example, strategy, remuneration, responsibilities and 'what if' scenarios.
- Choose a trading name; check that it is permitted, and is not already being used by another, similar business.
- Use a company formation agent (or your accountant or solicitor) for the legal formation of a company or limited liability partnership.
- Check any legal requirements (eg licences) with your local authority and organise insurance.
- Contact HM Revenue & Customs to organise tax and National Insurance (and PAYE if you will be an employer); if necessary, register for VAT with your VAT office.
- Organise systems to keep records and ensure that you can comply with statutory requirements (eg filing annual returns).