When looking at starting a business in the UK, you first need to answer a few questions. For instance, what type of business is it? What structure do you plan on adopting? Where are you going to work from? And are you planning on hiring employees?

Once you have answered these questions the picture becomes a lot clearer. The below article intends to give you an overview of these considerations. Give it a read and get yourself on the right path to starting a business in the UK.

Is owning a business right for you?

Sure working for yourself can be very rewarding indeed, but there are also a number of drawbacks
that you need to consider. We have listed a few of the key advantages and disadvantages below:

Advantages

• You can do something that interests you and that you are passionate about. Investing time and effort into something that you directly own and manage can be very rewarding!
• You choose your own hours – You’re pretty much out of the 9-5 grind and can choose flexible hours to suit you. When you’re in control, you make the rules!
• Control over your income – You no longer need to ask your boss for a pay rise, but in order to successfully grow your income, you need to successfully grow your business.

Disadvantages

• Starting a business is hard work and initially you are going to need to wear many hats. You’ll have to familiarise yourself with marketing and finance pretty quickly and need to rely on yourself to set the strategy.
• Owning a business means you are going to be subject to irregular income, especially in the early stages.
• You will have to look after your own finances, including bookkeeping and tax returns
• Unfortunately ditching the 9-5 hours also means you’re ditching the employment benefits and the all-important paid leave.

What business structure do you want to go with?

We have a detailed section on the various business structures and their requisite advantages and disadvantages. We recommend you give that a read before deciding, but It is imperative that you select which structure suits you ASAP. This affects a number of key elements including: Tax, liability and accounting.

Will you need financing?

Like most things in life, you need to assess the money situation before making a leap. Therefore, one of the first and perhaps the most important step is making a budget. In this regard you need to think about all of the costs involved. This may include:

• Renting business premises or shop front, and costs associated with it – including electricity
  and internet access
• Buying or hiring vehicle(s), and the cost of fuel and maintenance
• Equipment including tools, computers and phones
• Setting up and hosting a website
• Advertising and marketing materials
• Staff.

Depending on the nature of your business, not all of these costs may be relevant. For example staff may only be required when your business becomes more established and many businesses operate without a premises.

In addition to your business costs, you also need to understand your personal costs. This is especially important if you are leaving current employment. Rent, mortgage, utility bills, childcare and food all still need to be paid. So you have to ensure the cash flow is there to support your lifestyle and invest in your business.

Where to get financing?

Once you have a clear picture of how much you need and how much you can invest, you can assess the need for any financing. With regard to obtaining finance for a UK business there are a number of options:

• Government backed start up loan – No application fee and a 6% interest rate. With a Government backed start-up loan you can borrow up to £25,000 and re-pay over 1-5 years.
• Angel Investment – Networking, going to pitch events and searching angel directories can help you secure angel investment. This is a situation where you will cede a percentage of your business in return for financial investment. Usually an Angel Investor is highly experienced and can therefore also offer hands-on advice and guidance.
• Bank Loans – Bank loans are the typical form of investment in most walks of life. The drawback of course is that banks tend to charge pretty significant interest and will want collateral.
• Crowdfunding – Crowdfunding has been popularised by websites such as kickstarter which allow people to invest small amounts of money to get an idea off the ground. Whilst not successful for everyone, the platform has been the route for many successes. Think Oculus, Peloton and Brewdog!
• Check out the Gov.uk regional loan options

Will you want to hire staff?

Hiring staff for your UK business comes with an additional layer of complexity. We discuss many of these in our HR section, however a few of the key ones include:

• Employment laws – The UK has a number of employment laws that you will need to comply
  with. This includes a national minimum wage, paid leave and sickness and pension
  requirements
• Employee on-costs – A salary isn’t the only charge concerning full time employees and you
  will have to consider holiday pay, pension, and national insurance contributions when
  budgeting.
• Policies – You will need to develop a number of policies ranging from holidays and sickness
  to code of conducts.

What licenses do you need to start a business in the UK?

Dependent on the nature of your UK business, you may need to apply for a license in order to do business. For instance, a restaurant or bar will likely need a license to sell alcohol and a gym may need a license to play background music.

Significant fines can be incurred if you don’t have the correct licensing, so it is definitely worth getting your ducks in a row. Fortunately for us Gov.UK provides a pretty handy license finder so we can ensure we are compliant.

What taxes do you need to consider when starting a business in the UK?

There is no escaping the tax man and you will need to consider a number of taxes relating to UK Businesses. These include:

1. Corporation tax (for Limited company structures)
2. Value Added Tax (VAT) (>£85,000 revenue)
3. Business Rates
4. Income tax
5. Capital gains tax (for public companies/those trading shares)
6. Employers national insurance contributions

Some or all of these may be relevant dependent on the nature and structure of the business. As a start HMRC have produced a handy interactive guide to help out.

Do I need insurance to start a business in the UK?

There are a number of insurances to consider in order to protect you and your business. Some of the commonly required insurances are:

1. Employers liability – compulsory if you are looking to hire employees
2. Professional Negligence
3. Business contents
4. Public Liability
5. Product Liability

Of course not all insurances will be relevant to you and in some instances more specialist insurances might be required. It pays here to do your research and get the right insurances in place to protect your business and yourself.

What are some key websites to help me start a business in the UK?

There is a big push in the UK to facilitate new business and investment. As a result, there is a wealth
of helpful information out there! We recommend starting with the great information available
through the Government websites:

• England – GOV.UK
• Wales – Business Wales
• Scotland – Business Gateway
• Northern Ireland – Invest Northern Ireland

Summary

We hope this article has provided you the key details to consider when starting a business in the UK. From knowing whether starting a business is right for you, to knowing what the key steps are we are hoping this proves useful on your journey. Make sure to check out our other detailed sections and put yourself on the road to success!

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