The content of this guide is the result of more than 10,000 consultations and day-to-day work with entrepreneurs at every stage of their businesses. So, without further ado, let's get to it.
1. Choose your accountant
Make sure you choose an accountant who specialises in start-ups. There are many accountants who work mainly with businesses that are already trading. You also need to choose an accountant who is always willing to help you. Some accountants are not patient enough to teach people who are getting involved in business for the first time.
Don't consider price alone when choosing your company's accountant. A few hundred pounds saved on accountancy fees can turn into thousands of pounds in penalties – and you will miss the opportunity to learn the best way to structure your business.
Make sure you ask for letters of recommendation from other clients. Visit the accountant's website to get a better idea of what their firm is doing. If the website was last updated 6 months ago, it means the accountant is probably not up to date with the latest tax legislation either.
Make sure you choose an accountant who looks after their own business the way you would like them to look after yours. If you want to grow your business, choose an accountant who has also grown theirs. Someone who can give you business advice as your company grows.
You should make sure you surround yourself with people who share your goals – your accountant is someone who will be close to your business at all times. Visit your accountant's YouTube, Facebook and LinkedIn to get to know them better and understand whether they will definitely be able to help you.
2. Find a solicitor
Your company's solicitor will be the second most important professional close to you and your business. Once again, you need to choose a solicitor who specialises in start-ups.
A solicitor can help you with:
- Employment and subcontractor contracts
- Commercial agreements
- Terms and conditions
- Intellectual property protection
- Rental and lease agreements
- Business licences
A solicitor can also help you with business licences. Speak to the solicitor before agreeing to hire them. Try to hire a solicitor who charges a fixed fee rather than an hourly rate. You shouldn't pay a solicitor to study your case. You should pay them to deliver a service for you.
Ask for letters of recommendation from other clients too. Make sure you agree with the solicitor when the final work will be delivered, to avoid delays.
3. Find other relevant professionals
If you need to hire the services of other relevant professionals, such as business consultants and business mentors, make sure you research them very carefully to find out whether they genuinely have start-up experience.
Look at what the professional has achieved in their own business. Does it match what you expect for your start-up?
4. Prepare a business plan, or at least a simple version of one
There is no right or wrong opinion here. Many people believe that preparing a business plan is a waste of time. In my opinion, that is far too radical a view. In every business I have been involved in, I have prepared a business plan, or at least a simple version of one.
A simple version is a business plan that doesn't need to run to 30 or 50 pages. It's a short version that covers the essentials.
The most important part of the business plan, for me, is the quantitative data:
- Sales forecasts
- Cost analysis
- Profit and loss forecasts
- Cash flow forecasts
- Balance sheet forecasts
These make up my short version. In fact, a business plan is very important for you because it helps you clarify your business idea and avoid mistakes during the implementation phase.
If you want to raise external funding, find an investor or secure other forms of finance, you will need a business plan anyway. The purpose of this article is not to teach you how to write a business plan, but rather to give you a basic introduction.
A business plan needs to include:
- A description of who you are
- Which products or services you want to sell
- A market analysis and description
- A description of your potential customer types (target segmentation)
- Market research
- Marketing strategy
- Competitor analysis
- A description of operations and logistics
- Pricing strategy
- Financial forecast
- Personal survival budget
- Cash flow forecast
- A backup plan in case things don't go as planned
5. Choose the best legal structure for your business
You should start your business with the right business structure. I have heard many accountants giving the wrong advice on how to choose the best legal structure for a business.
You cannot choose your legal structure based only on the total tax you will pay or on how much the accountant charges to prepare the service for you. As a general rule, being self-employed means paying lower fees than forming a limited company.
There is a tax disadvantage to becoming a limited company compared with being self-employed, but in my opinion, becoming a limited company has more advantages overall:
- In a limited company, shareholders are protected by the company's limited liability. That protection is priceless.
- Trading through a limited company also looks more professional in the market.
- In tax terms, in a limited company you have the option of drawing money out as dividends (if you are a shareholder).
- You can keep the business profit as retained earnings.
- You can also bring in investors and sell shares as a limited company.
If you are self-employed, even if you trade under a name other than your personal name, you must always use your personal name and trading name on all official paperwork, invoices, letterheads and similar documents.
Let's say, for example, that I am an accountant and I have an accountancy practice called Vertice Services. If I were self-employed, I would have to trade as Rodolfo Basilio trading as Vertice Services.
If you are self-employed, you are required to draw all the profits and pay tax on them, and you don't have the same flexibility that a limited company offers
