Career Guide

Many people dream of being 'their own boss', and it can be a very rewarding (and profitable) career move.

But remember that success is more likely with careful planning.

So, read the information below and check out the links before you dive off to start up your new enterprise.

Starting a business

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Sole proprietor (one-man businesss or sole trader)

With this type of business, you own and run it yourself. You reap all the rewards if it's successful, but you also have to do all the work, and are responsible for any debts.

Though it might sound inviting to 'be your own boss', this kind of business can be very stressful and you might end up working very long hours. And if the business fails, you may lose a lot of money and even your home.

If you decide to strike out on your own, you can be self-employed which is the way that several million people in the UK run their businesses.

There are more details about this type of busines in the 'Self employment' section of this guide.


Partnership

If you team up with a few friends, or relatives, you could start a partnership. This will allow you to share the workload and any debts you might incur, but you'll also have to share any profits the business makes.

There are different kinds of partnerships. You can form a Limited Liability Partnership which protects the partners' personal assets if the business goes bust.


Limited Company

This is a bit like a partnership because you have to have at least 2 shareholders. But you can often get round this by having your wife, husband or partner as the second shareholder.

The main benefit of this business is that all the shareholders have limited liability. This means that you won't lose all your money if the business goes bust.

Again, the workload can be divided among the shareholders, but the profits have to be shared out too.
 
See the Companies House website for more information.
 
 
Co-operatives/ social enterprises/not for profit/ charities
 
These types of business usually have objectives other than simply making profits for the owners. But some of them, such as social enterprises, may still aim to make profits, even though their real objective is to tackle a social problem or issue.
 
For example, you could set up a social enterprise to tackle local unemployment, but it could still be a limited company. This is where things sometimes get complex.
 
For more information, take a look at the websites of the following organisations:
 
Social enterprise coalition
Charity Commission 
Union of Cooperative Enterprises
Co-op online
 
 
Setting up your business

Think carefully about your circumstances, and what business format would be best for you. Then you can decide how to get your business started.

An accountant or solicitor will set up a partnership, limited company or a co-operative for you. However, they will charge a fee for the service - some much more than others. Always ask about fees before getting a professional to set up a company for you.

It's not essential to have a lawyer or accountant to do the work in all circumstances. You can set up a limited company or partnership yourself very easily and cheaply through Companies House. There are also specialist agents who can set-up a business cheaply for you online.

If you decide to do the work yourself, you have to remember to make returns to Companies House at the correct time of year - otherwise you can be fined. If you employ an accountant, they should do all the paperwork for you.
 
If you're simply going to work on your own and be self-employed, then all you need to do is to register as being self-employed with HMRC and away you go.
 
 
 
Getting advice

While you're planning and researching your business, it's a good idea to get some good advice too. There's  a lot on offer and most of it is free.
 
 
Business Link

Business Link have an enormous website where you can get almost any kind of information about setting up and running a business. It should be your first port of call.
 
There are also local Business Link operators, can find them here.
 
 
Solicitor
 
You may be able to get some free legal advice from a local solicitor - but always ask about fees before making an appointment.
 
If your business idea involves legal documents, or things such as licenses, it's probably essential to get some advice.
 
A solicitor can also set up a partnership agreement for you, or set up a limited company.
 
 
Accountant
 
Whatever kind of business you set up, you'll have to prepare accounts for HMRC (HM Revenue & Customs) each year. 
 
It's relatively easy to do your own accounts if you're self-employed. But if you have a partnership or a limited company, or if your business is large or complex, it might be best to get an accountant to do your accounts for you.
 
 
Your business plan
 
 Planning your business carefully is essential if you want to give it the best chance of success. So, you should write a business plan.
 
If you're trying to raise finance by getting a bank loan, or asking people to invest in your business, you'll need a plan anyway, so they know exactly what you want to do and how you're going to do it.
 
There are software packages which help you write a business plan (see Amazon for options) and some of the big banks have specially designed free software too.

But you can write a plan using a standard word processor and it will be fine. The only problem you'll face is what to include in it and how much you should write - these things might be crucial if you're not to bore readers to death!
 
If you're based in London, the London Development Agency can help with writing your business plan if you're looking for finance. The 'Access to finance' scheme enables you to employ a business consultant to help you draw up your plan to approach investors or banks.
 
 
 
Business essentials

Once you've got your business set-up, you'll have some other basic admin to deal with. There may be a lot more than you think, and it can take a few weeks to get it all completed.
 
Business Link can help with the work you have to do in setting up your business. They have a Business Start-up Organiser which can help every step of the way.
 
 
Bank account

You'll need a bank account to pay-in receipts and from which you can make payments, for example to your suppliers.
 
All the major banks provide business accounts, and most of them have special offers for start-ups. For example, most offer free banking for the first 12-18 months.
 
Check out all the websites of the big banks for the latest deals:
 
HSBC
RBS
Lloyds-TSB
Barclays
Co-operative
 
Banks make a great deal of money from operating business accounts because they charge for cheques, deposits and withdrawals, and almost every other service they provide. 
 
When you're deciding which bank to go with, remember to check their service fees as you may get a shock once your period of free banking comes to an end.
 
Some banks will ask to see a business plan before they will let you open an account with them (eg Co-op Bank). And others have free software that helps you write your business plan, as well as business managers who can provide advice about things such as loans.
 
 
Website
 
Most companies these days have a website to tell everyone what they do, and (very often) to let customers buy their products online. 
 
So, you'll probably need to get a domain name and set up a site for your new business.

If you don't have experience of getting domains and designing a website, you'll need to budget for some professional expertise - or try getting a friend or relative to help.
 
You may also need software on your site to run a shop, and you'll need to organise how payments will be made.
 
 
VAT registration
 
Business are required to be registered for VAT if their turnover goes over a certain limit - currently this is £64,000.
 
However, even if you don't think your business will earn more than the registration limit in the next few months, it might be a good idea to register for VAT voluntarily. This is because you can claim back the VAT you spend on buying goods and services for your business. So, you can save money.
 
You can find out more about registering for VAT at the HMRC VAT website.
 
 
Appointing an accountant

Although you could do your own accounts at the end of each year, tax rules are complex and change almost continually. So, it's often easier and more convenient to get an accountant to do the work for you. Of course they charge a fee.
 
Before you appoint an accountant, ask friends and relatives if they can recommend one. Then ring round and ask about their fees and whether they will do your accounts for you. 
 
It's also a good idea to arrange to meet the accountant (an introductory chat is normally free - but always ask!).
 
If you decide to appoint an accountant, they should provide you with an agreement describing the work they will do for you.
 
 
Accounting software
 
Once you start your business you'll need to keep careful records for accounting purposes. Keep all your bills and invoices so you can draw up your accounts at the end of the year.
 
If you have an accountant, ask them if they use or can recommend some accounting software. Using a software package to keep track of your accounts can save a lot of time. And if your accountant uses the same software it can save even more.
 
 

Telephone numbers
 
Business Link                                   0845 600 9006
  
Companies House Contact Centre      0870 333 3636     
 
 National Insurance
Self-employed helpline                     0845 915 4515 
                    
Prince's Trust                                   0800 842 842

Useful websites
 
 BBC - starting a business section.

BCC - British Chambers of Commerce: useful for networking. Check their site for your local branch.

BERR - Department for Business, Enterprise and Regulatory Reform (formerly the DTI).

Business Link - masses of information about all aspects of starting a business.

Companies House - website of the organisation which registers limited companies and partnerships. Lots of useful advice and information.

DWP - Department for Work and Pensions, starting a business section.

HMRC - starting in business section.

Prince's Trust - business start-up help for unemployed people aged 18-30.

Union of Co-operative enterprises - advice and information about co-ops in the UK.

What type of business?

Once you've got an idea for a business - like what you're going to make, or what service you're going to provide - you'll need to think about what type of business you'll set-up.

The basic decision you have to make is whether you're going to own and the run the business yourself, or whether you're going to get someone else to help.

Remember that running a business can be very hard work, so it can be wise to think about joining forces with other people to make sure that your idea succeeds and you're not overwhelmed.

Having other people involved can also help in raising cash to get the business off the ground.

Here are some alternative types of business to consider:

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