Starting Your Business

When you want to start your own business, one of the first questions you will be asking yourself is how to set yourself up - Sole Trader (self-employed) or as a Limited company.

There are lots of factors to take into consideration and some of these are:

• A limited company is a separate legal entity whereas when you are self-employed you and the business are one and the same so sometimes depending on what you do, limited from the start can be good to give that separation of self and business.

• If something goes wrong (assuming no legal wrongdoing) then your personal liability is limited when you are a limited company but if you are self-employed it isn’t. It depends on what you do a bit as to if that is a concern or not.

• A limited company needs its own bank account because it is a separate legal entity - but I always recommend one when you are self-employed to keep business and personal finances separate.

• Tax!! Now given there is a budget at the end of this month, the tax benefits of one structure over another are a bit up in the air... but also... tax shouldn’t be the main factor in your decision-making process.

• A limited company may incur additional costs for company accounts and corporation tax - you can do these yourself but the rules are a lot more complicated so I would recommend having an accountant.

Another consideration when starting your own business is when to start working with an accountant:

• Often, by the time you think it would be useful to work with an accountant you probably should have been working with them earlier - good accountants will be flexible in the support that they offer so that as you grow you can build the support but also as you grow out of that and take on staff you can pull bits back in house. Look for one who works on a fixed fee basis as then you know what you will be paying - there are still some that will invoice for every call you make to them and that’s rubbish (in my opinion) as it doesn’t build relationships or encourage timely questions etc.

• And what would an accountant expect from you? Do stuff on time as agreed is a good start!!!

• Shop around too - don’t go with the first or the cheapest - fit is key (the right fit might be the first and the cheapest, but it shouldn’t be the key decision driver).

Rachael