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Starting up a new business in the UK is an exciting opportunity.
The UK is a booming market for start-ups, with approximately 836,000 registered in 2020. A 41% increase since 2019 and a 96% increase since 2018.
If you have been considering starting up a new business venture, then this article should be able to help guide you along the way!
How to start up a new company
1. Develop An Idea Do your research
The first step when starting up a new business is coming up with an idea.
This may seem quite daunting at first, but there are many ways you can do it – from brainstorming your own ideas on paper to making use of online tools which will help generate them for you.
The most important thing is that your chosen idea should be something that people might buy into – i.e., has good potential of actually being successful!
Once you have an idea, it’s worth doing some research to find out if there are any similar businesses or products already on the market. If so, then try and think of ways that your product might be better than theirs e.g., cheaper, more attractive etc.
It may also be a good idea to check out how their business is faring – i.e., what sort of reviews they get from customers (good and bad), whether they’ve had recent successes in terms of new partnerships with other companies in their field etc.
This will help you build up your own knowledge about the industry before making such an important decision!
Don’t forget that if at first glance your chosen niche appears too competitive for you to compete in, there may be a way to work around it.
The next step is the critical one – and where most people start falling down on their plans too early! As well as putting together an outline of what your business idea will look like based on all this research, it’s important to do some market research into competing companies and see which aspects make them different enough that they will be able to compete.
2. Create A Business Plan
The first steps before starting a new business are to create a plan for the first five years of trading, including your strategy and marketing plan. Creating this upfront goal will help you explore assumptions about what type of customers you’ll need, how much you should charge for your products or services, and how big your company will grow over time.
When you create a business plan for your company, be flexible. Decide how much time and money you’re willing to invest in the venture before deciding where you want it to go.
Creating a plan for your business is one of the most important steps when starting up. Smart planning can help you foresee potential problems and increase your chances of success in the long run.
3. What Smal Business Startup Grants Or Loans Are Available
Finding small business grants or loans in the UK can require investigation, with eligibility depending on a whole range of factors.
A small business loan is a form of financing, which you’ll have to pay back with interest. Grants are not repaid and cannot be used as equity for your company.
Some grants require you to invest the same amount in your business. In this case, if you’re given a £10,000 grant, you need to have a £10,000 balance in your account for investment purposes.
There is a range of startup business grants available depending on the sector you want to go into. For example:
The National Heritage Lottery Fund offers grants interested in boosting the entire local economy and encourage skills development and job creation.
UK Research and Innovation is an organization that provides innovators with funding, loans, or vendor bidding to stimulate growth.
R&D reliefs help companies that want to innovate and develop something new. It is available for a range of different types of projects, such as those in science or technology fields. R&D can even be claimed on unsuccessful research or developments
Business Assistance: A major cost of starting a new business is your company website. Many companies offer Free Website Design offers to help get you started.
Legal structures for businesses in the United Kingdom
The United Kingdom has a number of business structures that we call companies. These include a limited company (limited liability), partnership and sole trader. The most popular form is the limited company which carries both risks and benefits for the owners in different ways from other types of business structure.
A Limited Company
The most common form of organisation for businesses in Europe today is to be set up as a private company (Ltd) with shares which would then require both owners/directors to have qualifying formalities before they could trade legally under that name. For example, it may take some time after incorporation for them to register with Companies House who will check that all paperwork has been completed correctly including appointing someone resident at an address within Great Britain who can be the company’s registered office.
Limited companies have greater protection against debts than in partnerships and sole traders. They also offer more scope for tax advantages such as relief on employment-related costs, capital gains taxes when shares are sold, dividends paid to shareholders or interest earned from loans made by the business. If an individual is looking to raise finance through pledges or debt then lenders may find that they have better security with ownership being vested within a legal structure rather than personal guarantees offered where there has been no formal registration of any form of business entity. A limited company may also provide some protection should someone decide to take out a court order against them which could happen with a sole trader.
A sole trader is someone who owns and operates their own business as an individual, rather than being a member of any form of partnership or limited company.
A person carries out the activity in which they are engaged under their own name and risk, for themselves alone (or with one other partner), without having to register that enterprise. Sole traders provide unlimited liability for all debts incurred by the business so if you have no assets outside your business then it can be quite risky as bankruptcy will mean losing everything!
The main advantage of running this type of operation is that there are only two parties involved – the owner-operator and his customers/clients.
A business partnership is an agreement between two or more people, each of whom contributes money, property (such as equipment and buildings), expertise, or other resources to the business.
The main advantage of a partnership over running things on your own is that they share any profits from their enterprise – but also in terms of liability for its debts!
A partnership can be advantageous because it limits potential losses while sharing investment risk with investors; on the downside, there are inevitable disagreements about how best to run the company which may lead to arguments and bad feelings. Partnerships typically divide up tasks among those involved so one person might provide most of the capital whilst another provides day-to-day management oversight. Of course, some partnerships take different forms – you may have heard of a ‘joint venture’, for example.
The potential disadvantages are that the partners will need to agree on how best to divide up tasks and set out their respective roles (the company may not be able to function if each partner does not accept this). The risk is also greater than it would be with just one person in charge because liability falls onto more people – so there’s no escaping responsibility!
Whatever type of business you decide upon: make sure you research thoroughly before taking any action; get legal advice where necessary and always seek professional advice about your specific needs. There’s nothing worse than making mistakes when starting out!
Register Your Company
Registering a business with Companies House is the key step in becoming an official Ltd. It’s also really easy and inexpensive – it costs £12 plus VAT for most companies.
The documents needed include all owners’ passports or birth certificates; confirmation that you’re allowed to use your proposed trading name; information about directors and shareholders (if applicable); details of any other registered trade names used by the company; evidence you have permission from people who own shares if these are not owned by yourself or your spouse/partner. You will need at least one director who lives in Britain so they can sign off on paperwork for the business.
If you’re setting up a new company, these documents will be filed with Companies House as well as HM Revenue and Customs (HMRC).
Ltd Companies are required to file an annual return at the end of each tax year, which is due on 31 October in England or Wales – this must include confirmation that all shareholders have paid their share capital contributions and details of any profits distributed during the previous 12 months. You also need to register for VAT if your turnover is expected to exceed £85000 per annum. Incorporating can take around four weeks from applying until completing registration but it does cost more: fees start at £16 plus VAT.
Every business has different needs so we recommend getting advice tailored to you.