Are you thinking of setting up a new small business in the UK? Want to ditch the day job and become self employed? In this small business startup checklist we’ll cover some of the things you need to think about.
1. Come up with a business idea
This is a pretty obvious one but as part of your business startup checklist you need to come up with a vaguely viable business idea. If it involves significant investment make sure you’ve run your numbers. You don’t want to be stuck with a business that can’t make any money. Obviously there’s safer businesses, such as plumbers and electricians, whose skills are always in demand. Then there’s more risky sectors such as restaurants and coffee shops. Do your homework and know your numbers!
2. Get some business insurance
Before you do any actual work it’s a good idea to get some business insurance. This will hopefully protect you if things go horribly wrong. Public Liability insurance is generally a good starting point but the insurances will depend on your sector. Again, do your homework and research what sort of insurances businesses normally have in place.
3. Do work and get paid
Generally speaking you can start working for yourself straight away. You don’t need permission from anyone and you don’t need to inform any authorities (yet!). Do work and get paid. Keep doing this until you’ve made your first £1,000.
4. When do I need to register as self employed?
In the UK you have an annual Trading Allowance of £1,000. Anything you make below that, nobody really cares. However once you’ve passed the £1,000 mark you’ll need to register as self employed with HMRC. Technically speaking there’s no such thing as “registering as self employed”. Instead you need to register for Self Assessment. You have until 5th October of your business’ second tax year to register for Self Assessment and Class 2 NI. I would suggest doing this as soon as you know your business is likely to make more than £1,000.
5. Think of a business name
Next on the business startup checklist, while you’re making your first £1,000 you have some homework to do. First thing is to think of a business name. If you’re self employed this can be your own name or you can come up with a dedicated name for your business. This doesn’t need to be unique but be careful with trademarks and names used by other businesses. There’s no ‘register’ of business names if you’re self employed.
6. Keep accounting records
Keep all of your receipts. You can store them physically or digitally – up to you. If you only have digital scans / photographs of receipts make sure you have good backups in case things go wrong. Log all of your expenses and income. Completely up to you how you do this. A spreadsheet is generally easiest when you’re just getting started.
7. Find a good accountant
Try to arrange an initial meeting with your accountant. Explain your business model (how you plan to make money) and get them to check over everything you’ve done so far.
8. Open a business bank account
It’s not mandatory to have a dedicated business bank account but it makes life a lot easier. There’s loads of options out there now. You should be able to open a new account pretty quickly. Check out Tide and Starling – I’ve used both of these for my own banking and so far so good.
9. Reserve your domain name
Before you make your business name too public it’s a good idea to reserve your domain name. Once it’s gone it’s gone!
10. Build a website
If you’re happy to get your techie hands dirty you can build your own website. Alternatively you can pay someone to do it for you.
11. Pay your taxes
The UK tax year runs from 6th April to 5th April. At the end of the tax year you’ve got until the following 31st January to prepare your accounts, submit your Self Assessment tax return and pay any tax due. Remember HMRC don’t care about your shoebox full of receipts (unless you get audited – so keep them safe!). Generally HMRC just want to know:
- Your business turnover
- Your business expenses
From this they will know how much profit you’ve made. You pay tax on your profits at the current tax rates (generally 20%).
12. Some other things to think about
A few other things to consider. Do you need business premises? Would it be worthwhile setting up as a limited company? What about staff? Above all, enjoy the ride! Becoming self employed is one of the most exciting decisions you’ll make in your life.
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