Five things to do before starting a business

In this article, we discuss;

Decide whether you will operate as a sole trader, or a limited company
Get clear on your tax liabilities
Decide whether you need to register for VAT
Forecast your cashflow
Learn how to use a bookkeeping software

Estelle Hardwick

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Picture of About Estelle Hardwick

About Estelle Hardwick

Estelle is the Director of AMR, overseeing the Tonbridge, Tunbridge Wells and Chatham branches. She makes sure that AMR provides exceptional support to each and every client.

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Starting a new business is both an exciting and daunting time. While you’ll want to nail your business plan and think about how you’ll attract customers, it’s also vital to ensure that the practical aspects are taken care of. The team at AMR Bookkeeping Solutions know the challenges of building a business from scratch and are experts at supporting start-ups with their business bookkeeping needs. Here, the team at AMR provide advice on five things you need to do before starting a business.

Decide whether you will operate as a sole trader, or a limited company

One of the first decisions you’ll need to make is whether to operate as a sole trader, or a limited company. As a sole trader, the self-employed business owner and the business is treated as one legal entity. For a limited company, the business is seen as a distinct legal entity that is separate from its shareholders and directors. Each choice has different implications for finance, taxes and legal obligations, so it’s important to weight the pros and cons and make a considered decision. Read our blog ‘Sole trader or limited company?’ for more information.

Get clear on your tax liabilities

As soon as you start trading, you’ll need to register your business with HMRC, to begin paying income tax on any profits – as well as Class 2 and 4 National Insurance. The types of taxes you will be required to pay, and how you will pay them, are different depending on whether you have chosen to register as a sole trader or limited company. For instance, if you register as a limited company, you’ll be required to pay Corporation Tax.

Find out more about registering with HMRC here.

Decide whether you need to register for VAT

Businesses that provide taxable goods and services are required to register for VAT if their turnover is more than £85,000 per annum. But businesses with a lower turnover can still register.

VAT-registered businesses must pay HMRC the VAT they charge; however they will also be able to claim back VAT on the goods and services they purchase.

One option for new businesses is HMRC’s Flat Rate Scheme. This allows VAT-registered businesses with a turnover of less than £150,000 to pay a fixed percentage of its turnover to HMRC every three months. This scheme reduces paperwork and means new companies can keep some of the VAT they charge their customers.

Find out more about VAT on the government’s website here.

Forecast your cashflow

A healthy cashflow is key to a healthy business. Forecasting ahead with accuracy can be a challenge if you have no prior experience, but it’s vital to produce a cashflow forecast so that you can set budgets and ensure your business will not run into problems down the line.

If you’re struggling, hiring the help of a professional cashflow management projection service can be an invaluable investment, and give you a head start when meeting potential lenders.

Learn how to use a bookkeeping software

Good bookkeeping is essential to any business. Most businesses use a bookkeeping software program, such as Sage or Xero, to keep on top of their finances. There’s a little bit of learning involved in getting to grips with using a bookkeeping software, so make sure you set aside plenty of time get proficient.

Here at AMR we are experts at helping businesses of all sizes with their bookkeeping and payroll requirements. If you have any questions about the contents of this blog, or you need professional bookkeeping advice, our friendly team will be happy to assist you. Get in touch and find out how we can help you and your business.

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Why choose AMR Bookkeeping Solutions?

Professionalism

We combine the highest level of professionalism with a friendly, clear approach for all of our clients.

Trust

Our approach is tailored to the needs of each individual client, and we build personal relationships to make sure that our clients can have complete trust in what we do.

AAT Qualified

All of our services are provided by our team of Association of Accounting Technicians (AAT) qualified bookkeepers, highly experienced bookkeeping experts and certified accountants.

CPD Trained

Each member of the team undergoes Continuing Professional Development (CPD) which keeps them right up to date with changing tax legislation.

Accredited Experts

All our bookkeepers are accredited in leading accountancy software Sage, Xero and QuickBooks.

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Get in touch for a free, no obligation consultation

Find out how AMR Bookkeeping Solutions can provide the right support for your business, send us your details and one of our experts will get in touch with you without delay.

Alternatively, you are welcome to contact us by phone on 01892 559480

You can also pop into our offices in Tonbridge.