A fresh start: setting up a business
With one in four UK workers furloughed at the height of the pandemic and some now facing concerns about redundancy, many people are thinking about working for themselves. Having had the opportunity to reflect, and perhaps more time to focus on activities outside work, some may be considering developing a hobby into a commercial enterprise.
You may be planning on becoming a self-employed plumber or electrician, preparing to launch a blog, or dreaming of turning your art or craft skills into a viable business. While starting out on your new business journey will undoubtedly be exciting, you will need to think about record keeping and your tax obligations. Getting good advice at the outset will help you get on the right track.
Here are some of the practical steps you will need to consider:
Business structure
Being self-employed or using a Limited Company are the most common ways to trade. Both have their advantages and disadvantages, depending on your personal circumstances and preferences. The way you remunerate yourself and pay tax also differs with each.
Record keeping
Using the right software for your business will help you keep track of your spending, set yourself budgets and maintain your business records to meet your tax obligations. Many cloud accounting packages run online so can be used anywhere that you have an internet connection on a phone, table or computer. They also have plenty of add-on apps so can be tailored specifically to you and they are tax compliant.
VAT
If your business really takes off and exceeds the VAT registration threshold, which is currently £85,000, you may need to become VAT registered. Initially you could use a simplified VAT scheme but be aware some businesses have specific schemes depending on the trade sector.
Finding the right accountant will help you to deal with all of this and so much more. An accountant is a trusted advisor, a sounding board for new ideas and someone who can connect you to other specialists as you grow your business.
Thomas Westcott has the largest network of accountancy offices in the South West. With 28 partners and more than 250 staff operating from 17 offices, the company has supported a diverse range of businesses and individuals for more than 30 years.
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