Setting up a company in the UK has been an ongoing trend over the past two decades. Following the Covid-19 pandemic, many business owners have given up self-employment due to the economic impact as the world opens up again. However, by 2022, we are now starting to see an increase in the number of start-ups across the country. At first, what to do when starting a company in the UK can seem daunting. This article will walk you through the key steps of starting a business and how to own a company. So, why start a business in the UK? The most common reason for starting a business in the UK is that individuals prefer to work for themselves and maintain control over their work life. Starting a company also allows people to reap the rewards of spending time on their passions. The report also noted that self-employed individuals generally showed greater happiness and a sense of purpose aligned with non-monetary benefits than their employed counterparts. This in itself is a very tempting reason to ask, “Why start a private company in the UK?” While these benefits should not be overlooked, the challenges and practicalities of maintaining a livable income should also be addressed.
What type of business do you want to start?
The first step in learning how to start a company is to find out which business model your idea falls into. This is essential to building your business legally and diligently, but it is only the first of many first steps in starting a business in the UK. There are three main types of companies; sole traders, partnerships and limited companies. Each requires different standards and responsibilities. In this section, we explore these business models in more detail.
Self-employed persons – or freelancer – is someone who works for themselves and provides goods or services for a predetermined fee in order to generate a profit. These people control the success or failure of their own businesses and complete work-related tasks on their own time—sometimes hiring others to share the workload. Starting a business as a self-employed person also allows you to determine where and when to work, which means you can create your own personal schedule. The self-employed is also responsible for providing the equipment and resources needed to perform the work. Also, the responsibility for paying taxes, getting the right insurance, and paying off any debts lies entirely with them.
Partnership Similar to self-employed in many ways; however, partners work together, share income and pay taxes separately. Unlike freelancers, a partnership is a legal bond formed by a contract between two or more individuals or companies. Each party invests money and time, enjoying the satisfaction of making a profit, but enduring the hardships of any loss. There are different types of partnerships, and similar to the business model you choose, you have to research and choose the right type.
Like partners, there are different kinds of limited company. They are legally separate from their owners and their finances are separate from the owner’s personal funds. This means that shareholders are not personally liable or financially implicated if the business fails or assumes any liability. Another benefit of this model is that the owner is entitled to keep any after-tax profits. Ultimately, there are many aspects to consider when planning your business and choosing the model it belongs to. In the next section, people should ask themselves some questions to explore the strengths and weaknesses and whether registering a UK business is right for them.
Things to do when starting a company
UK companies, like others around the world, take a lot of hard work to get off the ground. You have to make sure that you have fully considered the legal implications of starting a business and planned carefully. You should also ask yourself if this option fits your lifestyle. Before proceeding, aspiring business owners must ask themselves the following questions:
- ● Does your business idea inspire you and are you ready to pursue it?
- ● Are you willing to continue learning while adapting to personal and economic factors?
- ● Do you sincerely believe in your business plan?
- ● Do you have access to secure financing to fund your business while keeping you afloat?
- ● Are you ready for possible failure?
- ● Do you have sufficient time management skills? If you answered yes to the above questions, then you meet the criteria and start researching how to own a business.
Brainstorming is the first checkpoint on how to set up a company in the UK. Like any other project, solid ideas grow and expand from tiny embers of inspiration. At this early stage, the best thing to do is to decipher how your idea differs from other similar products or services in your desired market. While letting your imagination run wild is an exciting prospect at first, it’s wise to be realistic and consider potential risk factors that could affect you later. You should decide at this stage whether your business offers products, services, or both. Knowing this, in addition to understanding your business model, will help you identify the likely market demand for your business. This will raise other possible concerns, such as the longevity and potential demand for your business idea. A great way to cost-effectively test your business’s market needs is to create an online survey or craft a landing page to attract customers while recording the traffic generated. This will clarify which ideas need to be revisited and which may need to be adjusted.
The next step in setting up a company in the UK is choosing a name. The name is the first thing potential customers will see and contact you. It has to be punchy and attention-grabbing, while being memorable and telling people exactly what you offer and/or service. One aspect of naming a company that may be overlooked by competitors is its scalability and its potential to accommodate potential future expansion of your business. This means choosing a name that doesn’t limit your business to one pathway in your chosen field. For example, “John Smith Guitar” is broad enough that the owner can dabble in guitar teaching, fabrication, and repair. The selected name must be available. Your final website will most likely have the same name as your company. Therefore, you should ensure that no other business claims this name so that you can freely control its use. There are many online tools that can help eliminate any duplication risk and, in turn, legal problems. Domain name generators also come into play until you can filter it down to options you really like that will benefit your business. Naming takes a fair amount of time, reflection and more brainstorming – but it’s an element that will pay off in the long run.
Today, the internet is an indispensable research tool, whether on the go or at home. As a result, your website will be one of the first places customers visit to see your business. Then, you should do everything you can to make sure your website stands out to the right audience, looks professional, and is easy to navigate. There are many online tools that offer different layout options. For example, Wix is a very popular web hosting tool that allows creators to customize their website and host it for free. Tools like this also allow you to connect a domain name of your choice to the site. Search Engine Optimization (SEO) is an important aspect of making sure your website is seen and gets the right traffic. For the uninitiated, SEO is the process by which website owners make sure that their website is one of the first that people search for certain terms in their web browsers. Search engine optimization is a broad term that covers many practices and is something you should study thoroughly when building your website.
According to the report, less than half of new businesses fail because the owners did not conduct in-depth research on their target audience and market needs. As mentioned, there are a few things you can do to help in this regard, such as surveys you might be conducting in the early stages of your research. Based on the data collected, you will be able to determine the average age, location and language of your audience. This may seem obvious, but looking at other existing companies similar to your own will help spark your own ideas and help you determine the best pricing range for your product or service. With all this in mind, you’re on your way to becoming a viable contender.
To start a company, the next useful stage is to develop a business plan to solidify your goals and help potential investors and partners understand what your company is all about. The file should have:
- ● A general blueprint summary of your idea, concise and to the point.
- ● The company’s overall goals, objectives, sales pitch to customers, and comments on what sets it apart from competitors.
- ● Any trends and any expected changes in the type of business you notice.
- ● You should include how you will interact with customers – more specifically, how you will meet their needs.
- ● A report of money flowing in and out of your business. Especially for potential investors, this enables them to calculate the risk of joining you.
- ● An action plan that describes what you want to achieve on an annual or quarterly basis.
make it official
Regardless of the type of business, you must register your company with HM Revenue and Customs (HMRC) to ensure that all taxes are paid on time and in full. Registering also means you are operating legally like any other UK business. Individuals registered as self-employed must master bookkeeping skills to maintain control over incoming and outgoing transactions. This will take the pressure off the income and sales taxes charged to you. Freelancers earning more than £85,000 a year must register for Value Added Tax (VAT), but can then recover the VAT they paid on the purchase of the business. Similar to freelancers, partners are responsible for the above work, but the delegation is shared by all involved parties. Finally, limited companies need to comply with stricter rules. They must be registered with Companies House to legally operate in the UK. There is a checklist for further requirements and submissions that must be completed. If this is the model you wish to operate, you must do your research carefully.
In this section, we will list other questions that may arise when you start a business in the UK:
- ● Poor Marketing – Most startups have little or no funding. Try researching different low-cost or free marketing methods to reach your audience.
- ● Funding – If you have little or no savings of your own, a new business owner can apply for a loan. This also requires research on interest rates and encourages you to provide a business plan to market financial forecasts to investors.
- ● Hire a team – choose your team carefully. Remind yourself of company goals and ethics. Do your employees share these and will they have a positive impact on your business?
- ● Effects on health – owning a business is different from an ordinary job. It is important to take care of yourself mentally and physically. In turn, your business will thrive.
In this article, we explain how to start a business in the UK. Getting a company off the ground can be difficult, but if you follow the advice presented in this article, you’re sure to find it a breeze.
This was posted by Vlada Tselomudrova in the member news section of Bdaily.