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Limited Company

13 August 2008 by

There are two types of limited liability company in UK. Private Companies are designated as Ltd or Limited, Public Companies are designated as Plc. I shall just deal with Private Limited Companies in this article as they are the most appropriate for small businesses.

The main point of a limited company is to give personal protection against company liabilities. As long as you comply with the relevant regulations, you will not be personally liable for the debts or other liabilities of your business. It is therefore a more appropriate business structure for any business that might face high risks in business.

There are also tax advantages in operating as a limited company once your business profits exceed the personal higher tax threshold. It may also be possible to get more favourable tax treatment for pension contributions, though this is a complex area needing specialist advice.

Another advantage to a limited company is that it is easier to build up a company as a tangible asset which you can sell in the future, perhaps to retire. This is because it is structured as a separate legal entitity and not entangled with your personal assets in the same way as a sole trader business.

The Companies Act separates out the owners of the company from the managers of the business. The owners of the business are the shareholders, of which there must be at least one. The shareholders’ liabilities are limited to the amount of money they have put into the business as a shareholding.

The managers of the business are the directors, of which there must be at least one. The directors are responsible for the running of the company and compliance with all regulations. They are also responsible for filing of financial accounts and annual return to Companies House as well as filing a corporation tax return to HMRC.

Providing the company is run legally and competently, there should be no liabilities for which the directors are personally responsible.

The regulations can be quite complex, so good legal and financial advice should be sought before proceeding.

Running a limited company can face more red tape and additional costs than a sole trader business, but the benefits usually outweigh the drawbacks.

For more detailed information go to www.companieshouse.gov.uk.

Filed Under: Planning

Sole Trader

13 August 2008 by

Sole Trader is the simplest business format of all. You can trade under your own name or a business name and you can set up almost anytime, anywhere with little restriction or red tape. There are a few key things you need to do first though:

  • Register with HM Revenue and Customs (HMRC) – For Tax and National Insurance
  • Open a separate business bank account
  • Set up a system for recording all sales, income and expenses
  • Check to see if your type of business needs any kind of license, there are very few
  • If you are working from home, do you need planning permission?
  • Check with HMRC to see if you need to register for VAT
  • Get yourself a set of guidance leaflets for business from your local Trading Standards office – pay particular attention to Business Names regulations and Consumer Protection

The main things to bear in mind as a Sole Trader are:

You and the business are legally the same. This means that you are personally liable for all the debts and other liabilities of the business to the full extent of your personal assets. If the business goes bust, you could lose everything.

Your business profits are taxed as your personal earnings along with any other earned or investment income you may have. If your profits are high, you will very rapidly become subject to higher rate tax.

In addition to tax you will have to pay two types of National Insurance contributions. Class 2 contributions are a fixed weekly amount, Class 4 contributions are a percentage of your profits between a lower and upper limit. You will be given the current rates and necessary information when you register with HMRC.

For the reasons above it would be wise to consult an accountant experienced in working with small bsinesses prior to starting out.

You can get more information from your local Business Link who will provide you with a business aviser free of charge. Find your local office at www.businesslink.gov.uk.

Filed Under: Planning

Company or Sole Trader?

13 August 2008 by

A key decision facing the new business is what business format to choose when starting out. Basically there are a number of options which will be influenced by factors such as:

  • How many of you will there be running the business?
  • What potential risks and liabilities will you face?
  • What are the tax implications of each option?
  • How much bureaucracy (red tape!) are you prepared to face?
  • Do you want to build a business with an assest value?

 

If you are setting up by yourself, there are two choices:

  •  Sole Trader
  • Private Limited Company

 

If there are two or more of you the choice is wider and adds:

  • Partnership
  • Limited Liability Partnership

 

I shall deal with each of these in separate articles to try to keep things as simple as possible!

Filed Under: Planning

Fame at Last!

13 August 2008 by

I’ve just come off the phone having been interviewed by Jonathan Miles of BBC Radio Newcastle on the subject of becoming your own boss.

It seems that a lot of people are not getting on with their bosses very well these days. Some of the comments from employees they interviewed included some very strong complaints about their bosses and the way they were treated at work.

As we business folk already know, the best way to avoid this problem is to Be Your Own Boss. (Unemployment is the other alternative, but we won’t go there! 🙂 )

Jonathan raised some interesting questions during the interview and I realised that some of them have not been covered on this website. One key one being which business format to choose when starting up. So let’s tackle that one next….

Filed Under: Marketing

Be Your Own Boss Reborn!

22 July 2008 by

Be Your Own Boss has had a long overdue ‘makeover’.

It’s been rebuilt using WordPress, a great tool for content managed websites, incorporating some of the latest Web 2.0 features. This makes it much easier to incorporate new content, so now I have no excuse for not adding lots of new information on the subject of starting and running your own business ;-). That should keep me busy!

The articles now give you the opportunity to comment and ask questions, blog style, so feel free to join in the business discussion. But please be nice 🙂

A few simple community rules:

  • No fighting
  • No abuse
  • No Spamming
  • No blatant self promotion
  • Don’t include links in posts, put your email address and website in the boxes on the comment form

 

Your email address remains private, it’s just between you and me. Your website will be linked to from your name on the comment.

Comments are moderated, if they break the rules, they won’t appear!

I hope you like the new site. Join in, learn and have fun!

John

Filed Under: Marketing, Online Marketing, Planning

Your New Idea!

20 July 2008 by

Many people start out looking for a great new idea that will take the world by storm. Some are lucky and find one, most don’t! Others try to copy an idea that is already out there or try to go one better. And I’ve lost track of the number of people I have seen who think they can run a business better than the professionals – when they have no understanding of the busines they are embarking on, or any other business for that matter!

So, how do you get started?

One of the best ways is to identify your key skills, things you are very good at and have a passion about. Enthusiasm is contagious and people will readily see that you really understand your business. Try to combine your skills in unique ways in order to differentiate yourself from others in your market. Think about specialising in a particular theme or product range, or cater for a readily identified group of people.

The most important thing is to identify your market and their specific needs. Trying to be all things to all people rarely works. people are usually motivated either towards pleasure or away from pain, so look for ways you can help them to achieve either of those objectives.

Listen to the problems people complain about, perhaps you can come up with a solution. Find out about their hopes, dreams and ambitions and see if you can help them to get what they want. the person who can help others the most will usually be successful in business.

The worst kind of business is the ‘Me Too!’ business. Often a pale imitation of a successful venture. If you must enter an already competitive arena, set out to be the very best. Far too often I see someone start up in a business with established competition and think they will take the business just by being cheaper. It rarely works! Yes, discount stores have been very successful, but they usually need massive resources to do so.

Do your research carefully and establish your own niche and your own reputation. Make sure you are meeting a genuine need and that there are enough potential customers to build a viable business.

Good luck!

Filed Under: Starting Out

Get Fully Indexed

16 July 2008 by

Many websites that manage to get listed in the search engines get little or no traffic. One reason can be that only the home page has been indexed in the engines but none of the others.

This can be for a number of reasons usually attritutable to poor site structure and content. One way of helping the search engines to find all of your web pages is to provide a sitemap.

The sitemap should be at level 1 on your site, i.e. in the root directory and should list and link to every other page on the website. The sitemap page should also be linked to directly from every other page on the site.

Filed Under: Online Marketing

Hide and Seek

16 July 2008 by

Don’t play “Hide and Seek” with your customers. Always give clear contact information with a choice of contact methods.

If you are operating from home and don’t want visitors or need a professional image, consider using a PO Box Address and a non-geographic telephone number such as a Toll Free 800 number in USA, or a Freephone 0800 or local rate 0845 number in UK. Other countries have similar services.

Filed Under: Marketing

Too Good To Be True?

16 July 2008 by

How do you recognise a good business opportunity when you see it?

Easy! It’s the one that promises to make you a millionaire in 24 hours with no effort. No, seriously, that kind of promise usually heralds a scam or at the very least overoptimistic hype.

You should be wary of anything that sounds like “get rich quick”. If it sounds too good to be true, it probably is. Similarly, anything that promises wealth for no effort or little investment is likely to end in disappointment. A genuine business idea or opportunity will need some investment of time and money to bring it to fruition.

Look for a sound business plan, proven performance by ordinary people like yourself and professional backup from whoever is presenting the idea or opportunity.

Filed Under: Opportunities

Identify Real Value

15 July 2008 by

To many people “value” means “cheap”. But we all know that, in reality, we get what we pay for – right?

If we pay too little for something and it doesn’t do the job, in truth we have just wasted that money. On the other hand, anything we buy that delivers real benefits is usually worth at least what we paid for it – often more. That’s real value.

So what about the “free” stuff then – is it really worthless? Well yes, sometimes! But more often than not, it isn’t really free at all. For instance, I want satisfied visitors and customers. I want you to feel that I give great value so that you continue to visit this website or remain a member of the Home Business Club.

When I give you something “free”, it is either to say “thank you” for visiting the site or to give you something useful to help you in your business. If as a result, you feel that you have had value for the time you spent with me, you are likely to repeat the experience. You might even buy from me expecting, rightly, that you will get excellent value in return. So, in this respect, “free” isn’t really free at all! You have given your time, attention and support in exchange.

Filed Under: Marketing
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