Is there any financial support available?
Not having enough financial support in place at start up (“being under capitalised”) is very common and can often lead to early business failure. It is a common misconception that there is a bottomless pit of public sector financial assistance available for start up businesses. This is not the case. In the past there have been specific schemes to help certain sectors or certain demographic types to start up in business. Any person thinking about business start up should certainly check with Business Gateway Fife to ascertain availability of financial support for their particular business at that moment in time.
What is the best legal status for my business?
This depends. There are advantages and disadvantages in all types of legal status so a chat with an adviser from Business Gateway Fife would be advisable. The majority of business owners tend to start as a sole trader but limited company status may be more appropriate or necessary. There are others, such as partnership, limited liability partnership, etc. and changing your status once trading is another consideration.
How to register as a sole trader?
Most people believe that this is more complicated or difficult than it actually is. In reality, all you need to do is notify HMRC using the appropriate paperwork. If in doubt, ask an adviser from Business Gateway Fife or contact HMRC.
Do I need an accountant?
As a sole trader, you don’t. However many sole traders will use the services of an accountant simply to provide the reassurance that they are taking full advantage of all the tax breaks open to them. In addition, an accountant can provide the peace of mind that the financial responsibilities are taken care of whilst you can get on with what you do best – i.e. running your business. Directors of limited companies have, by law, to submit trading accounts annually to Companies House so an accountant really is a prerequisite if you are a limited company.
Do I need a business bank account?
Legally speaking, you don’t. However, you will be well advised to use an account separate to your personal bank account. Banks like you to have a business bank account and many will offer financial incentives to encourage you to open one. However, business banking may be expensive so choose wisely.
Is it true that you don’t pay tax in your first year?
This is a common myth with limited truth. You probably will not pay tax in your first year but you will be due tax on your first year which will most probably fall due in your second year of trading. We strongly recommend you make provision to pay tax and discuss it with your Business Gateway Fife adviser.
Do I have to produce a business plan?
A business plan serves two practical purposes. The first is to discipline your pre-business preparation and the second is to lever out any funding (if required from banks or other sources). Few people have any trouble doing the business planning (i.e. the thinking behind their idea) but many have trouble producing a business plan (i.e. getting their thinking down on paper in a logical and orderly form). Your Business Gateway Fife adviser can help.