Financial Considerations when starting a business
FINANCIAL CONSIDERATIONS WHEN STARTING A BUSINESS
There are so many procedures – among them planning, funding and registering – involved in setting up a business that it can be too easy to overlook many of them – and, especially crucially, their financial implications. Here are various financial factors that should be at the forefront of your mind when you are placing the pieces of a new business.
What structure should your company have?
This is a huge question, as your chosen structure can significantly influence what legal protection and tax rules will apply to your business. You will most likely find yourself struggling to decide between the structures of sole trader or limited company. Many small businesses favour the simplicity of the first route, as it spares them requirements to file with Companies House; furthermore, it is through just a tax return that profits and losses are annually returned to HMRC.
However, in the long term, your business could better benefit as a limited company. That’s because, as your company grows, it will take on more liabilities that you would be personally responsible for were you to remain classified as a sole trader. If, on the other hand, your business encounters problems as a limited company, you would only risk losing what you have actually put into the business. This status can also grow to become the more tax efficient, especially with our specialist help.
What tax authorities do you need to register with?
As soon as you have decided on your company’s structure, discern which tax authorities you need to register with. This is vital because different structures come with different requirements in this area, and failing to heed this could lead you to run into inadvertent problems and penalties. In any case, however, you will mainly deal with HMRC when fulfilling your company’s tax and VAT obligations.
Have professional financial advice at hand
You will find yourself hit with decision after decision to make during the first two years of your business – and it can be a horrid feeling to make decisions while uncertain about all of the various ways in which they could affect your corporate success later down the line. That’s why you should regularly turn to a professional financial advisor to ensure that you are making sensible decisions for the sake of your company’s long-term health. Thankfully, we at Associate Services can provide such an advisor; don’t leave it late to get in touch.