What are the practical steps in setting up my business – should I be a sole trader, a limited company, a charity or something else entirely?
Limited companies and sole traders are by far the two most common legal structures for businesses. Partnerships, limited liability partnerships and social enterprises make up most of the rest. Choosing which is right for you depends on your business ambition and how you plan to operate. The resources below help you to learn to avoid common mistakes, understand the benefits and risks of different legal structures, and also consider questions such as whether you need an accountant.
Which legal structure?
Key: paid for service registration required official
Legal structures
Startups.co.uk
Evaluate the pros and cons of becoming a sole trader versus a limited company, plus an introduction to other business forms, from Startups.
WHEN: You’re planning your business and are clear on its objectives and growth ambitions and now need to choose the right structure to match.
WHY: Decisions you make now will affect your growth, ability to employ and tax.
WHAT: An unbiased and thorough analysis of the two main types of business structure, with an overview of other legal forms. Beware of comparisons by some accountancy firms and business formation companies that have a vested interest in pushing founders to limited company status.
OTHER: Business structures from Bytestart.
OTHER: Short comparison article on limited companies versus sole traders from SME Web.
OTHER: Company benefits and sole trader benefits from Bytestart.
OTHER: Key differences between sole traders and limited companies from Parker Randall Accountancy.
Community Interest Companies
Inform Direct
Get to grips with the pros and cons report of community interest companies from Inform Direct.
WHEN: You’ve decided you want your business to have a social purpose, but aren’t sure if you want to set it up a charity or a business. You are considering a community interest company (CIC).
WHY: Setting up a social enterprise affords many tax benefits and access to grants, but does mean profits for shareholders are sacrificed.
WHAT: An article outlining the pros and cons of CICs over other forms of legal and organisational structure.
OTHER: CIC guide from The Guardian.
OTHER: Case study on why I set up a CIC from Startup Donut.
Information helpline
Gov.uk
Call the national small business phone helpline from Gov.uk.
WHEN: You can’t find the answer online to a key business question.
WHY: You need to answer a question that is important to the way you plan to incorporate, set-up or operate your business.
WHAT: This is a free helpline; Monday to Friday 9am-6pm.
OTHER: Frequently asked questions on setting up a company from Startups.
Business formation
Key: paid for service registration required official
Setting up
Gov.uk
WHEN: You’ve decided to set up your business and need a comprehensive guide to everything you need to do, regardless of whether you’re intending to do it yourself.
WHY: Enables you decide on when to use a third-party such as an an accountant and gives you confidence that you’ve covered everything that’s legally expected of your new business.
WHAT: An article with comprehensive up-to-date guidance, assistance and advice on business formation for all types of legal structure, plus information on other related licenses and regulations.
OTHER: A guide on company set up from Bytestart.
OTHER: Article on ongoing responsibilities for limited companies from Startups.
OTHER: Choosing a name from Bytestart.
OTHER: Free resources on starting your business from Start Your Own Business.
OTHER: Find help and support for your business from Gov.uk.
Social enterprises and community interest companies
Gov.uk
WHEN: You want to set up a social enterprise or a trading charity.
WHY: CICs require a number of specific legal documents that need to be put in place at the outset.
WHAT: A list of requirements and process for structuring a company as a CIC, plus information on other relevant charitable legal forms.
OTHER: A comprehensive and accessible legal guide from St Helens Chambers.
Business registration
HMRC
Review these links from HMRC:
WHEN: You’re starting a business or forming a subsidiary business.
WHY: Failing to register your business may mean you are unable to trade in multiple areas, eg to open a bank account or gain credit with suppliers.
WHAT: Online registration processes.
OTHER: How to start a business by Xero.
Tax
Gov.uk
Consult the official guide on tax and starting up from Gov.uk.
WHEN: You’ve set the legal structure of your business and now need to register it for tax.
WHY: Helps you understand your tax requirements and related processes before you start trading.
WHAT: An informative and easy-to-follow guide on tax registration for startups.
OTHER: ICAS guide to setting up a new business from Institute of Chartered Accountants.
Approach to accounting
Key: paid for service registration required official
DIY accounting
Startups.co.uk
Choose the right accountant from Startups.
WHEN: You’ve decided to incorporate a business and now need to select an accountant to support business formation and/or your monthly/annual accounting and reporting.
WHY: Getting the right accountant allows you to focus on operating and growing your business. A good accountant will save money, time and anxiety.
WHAT: A short guide on how to think about selection of an accountant.
OTHER: Find a chartered accountant from Institute of Chartered Accountants.
OTHER: Another article on finding an accountant from Bytestart.
OTHER: Select the bank for you from Bytestart.
Accounting
Telegraph.co.uk
Learn how to do your books yourself from The Telegraph.
WHEN: You’re thinking about saving on costs by taking your accountancy in-house.
WHY: You aren’t sure if your business justifies outsourcing book-keeping.
WHAT: A short article on what to look out for with self-accounting. It’s worth noting that very few articles of any value exist on this topic for doing your own accounts for limited companies. For self-employed sole traders this is much more straight forward.
OTHER: Doing your own accounting from Startup Donut.