6. Set up your business
It’s important to understand the different risks and benefits before you choose – whether you set up as a sole trader, limited company or partnership affects:
- the amount of financial risk you’re taking on
- the way you’ll need to pay tax, and report to HM Revenue and Customs (HMRC), and Companies House for limited companies and some types of partnership
- how much control you have over how your business is run
If you’ll need extra help or people with specific skills to run your business, you might decide to take on employees. Find out about your legal responsibilities as an employer, including things like pay, tax and insurance, before you start employing staff.
You’ll need to register as an employer with HMRC if you want to employ people, even if you’re a sole trader.
Even if you’re not employing people, you’ll need to get insurance for your business.
Find an authorised insurer on the British Insurance Brokers’ Association (BIBA) website.
Depending on the type of activities your business is involved in, you might need to get certain licences and permits.
Use the licence finder tool to find out which licenses and permits you need to get.
Working with advisers
Make sure you get an estimate from any advisers you work with, and agree in advance what they will do.
Some advisers will charge an hourly fee, and others may offer a fixed price for a piece of work. It’s always worth getting several quotes before you decide who to use, so you can compare prices and make sure you’ll be able to work well together.
An accountant can help with things like financial advice and managing growth. You can also appoint them as an ‘agent’ to deal with your tax affairs, submit your VAT returns and deal with HM Revenue and Customs (HMRC) on your behalf.
Chartered accountants are fully-qualified members of a professional body. There are several UK professional accountancy bodies and you can find chartered accountants through them.
You should also consider getting legal advice when setting up your business. This is particularly important if you want to sell shares.
Find a solicitor on the Law Society website.