Starting your own business? 5 things that you need to do

There is an abundance of online information and support available if you are thinking of starting your own business. The easiest way to start a new business in the UK is to become self-employed. This is generally referred to as becoming a sole trader.

After considering the various business start-up options available if you feel that operating as a sole-trader is the best option, here are 5 things that you need to do:

Register with HMRC

As a sole-trader you will be responsible for paying your own income tax and national insurance. You are therefore required to register with HMRC and should do this before 5 October following the tax year that you commenced trading.

If, for example, you started trading in February 2016 you will have until 5 October 2016 to register as self-employed with HMRC.

Open a separate bank account

It is important to keep your business and personal finances separate. You should therefore set up a separate bank account to channel all business transactions through. This should ensure that your personal banking transactions do not come under scrutiny from HMRC in the event of a tax enquiry into the business.

Register for VAT if you need to

Currently if your business has an annual turnover of £83,000 or more you must register for VAT. You should therefore review your annual turnover at the end of each month and if you exceed the registration threshold you must register within 30 days. HMRC can impose charges for late registration.

In addition to standard VAT reporting there are a variety of VAT schemes available that could be beneficial for your business.

Take out insurance

The majority of small businesses take out public liability insurance to protect against accidental damage caused to your property or injuries to people visiting your property as a result of your business activities.

In addition, if you provide a professional service you should also consider taking out professional indemnity insurance, which covers your business if any of your clients are not happy with the service that they have received.

It is best practice to speak to an Insurance Broker who will help you to choose the most appropriate cover for your business.

Keep your books and records up to date

You must keep accurate records of all your business transactions. There are various accounting packages available and these should be reviewed to see what best suits your needs.

At Johnston Smillie, our team of accountants and tax advisers work with a large number of sole-traders and therefore have in depth experience of advising in this area. We can also help you to decide what the most appropriate business structure is for you, give you tips on how to minimise your tax liabilities, let you know how and when to register for VAT, what accounting software would suit your business needs and recommend reputable insurance brokers. Please call us on 0131 317 7377 to ensure that the operation of your business is efficient, leaving you free to concentrate on your clients!