Starting A Business Fundamentals
What’s Your Business?
I know you are itching to get started on setting up your business so you can start the exciting stuff wand build the life of your dreams.
But as the saying goes, those who fail to plan, plan to fail so it’s definitely worth putting in the hours now to make sure you have dotted all the i’s amd crossed all the t’s.
One of the first things you need to decide is what type of business you are going to start.
I’m assuming that you know what your passion is and what the focus of your business will be – although there’s help available in Impetus4 if you’re struggling with that.
What we are looking at here is whether your business will be full-time, a part-time side hustle, a franchise or a limited partnership.
Let’s look at the options and the pros and cons of each:
Part-time – By setting up a part-time business you can work it around other commitments such as children. You could even set your new business up as a side-hustle to start with, allowing you to continue with the day-job and the financial security it brings with it.
Franchise – Buying a franchise is a great way of running your own business with the benefit of training and the backing and support of a big brand. However, the cost of buying a franchise can be high.
Buy a business – Again, the initial cost may be relatively high if you buy an existing business, but it’s likely all the equipment and systems are in place and if you do your due diligence you will have a very good idea of the business’s profitability and prospects for growth. This can be a low-risk way to start your entrepreneurial career.
Start-up – This can be as simple as a computer and a desk in the spare room or premises with a team of staff. If you are starting up as a solopreneur, costs can be kept relatively low, but you are on your own and your business success depends solely on your decisions.
If you decide to go down the route of starting your own company you will need to decide on what legal structure it will have.
Sole Trader – Self-employed individuals who have personal liability for all business debts. You will have to register with HMRC and pay Income Tax and National Insurance on your earnings at the end of every tax year. You will be responsible for preparing a Self-Assessment tax return to report your annual income and tax liability.
Limited Company – They can be owned and operated by one person or multiple people and must be incorporated at Companies House. A limited company exists as a legal ‘person’. This means they are responsible for their own liabilities. The owners of a company are protected by limited liability. They are not personally liable for business debts other than what they agree to contribute to the business.
Limited Liability Company (LLC) – A great structure for accountants and other types of professionals who want to run a partnership with other people. You need at least two people to set up an LLP. This type of business structure is very similar to a normal partnership in terms of ownership structure and taxation, but it provides limited liability to all partners.
You can find more information about the different type of legal business structures at the gov.uk website.
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