The Basics of Starting a New Business

Registering as Self Employed

HMRC have a very informative leaflet: PSE 1 – Thinking of Working for Yourself?: If you are self-employed, you need to register with the Inland Revenue. You can do this through two ways:

• Complete HMRC’s On-line Form and post it to them
• Call 08459 15 45 15

Not sure if you are self-employed? If you can answer ‘Yes’ to the following questions, it will usually mean you are self-employed.

• Do you have the final say in how the business is run?
• Do you risk your own money in the business?
• Are you responsible for meeting the losses as well as taking the profits?
• Do you provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves?
• Are you free to hire other people on your own terms to do the work you have taken on? Do you pay them out of your own pocket?
• Do you have to correct unsatisfactory work in your own time and at your own expense?

If you are still unsure, contact your local HMRC Tax Office to find out:

• Find my nearest Tax Office:

The Structure of Your Business

Special rules are enforced if you’re working in the construction industry, or if your business is a:

• Partnerships & Partnership Agreement Form
• Company Names
• Franchise Set Up Explained 4

If you are unsure whether to form a limited company or be a sole trader, visit the following page to help you decide:

• Sole Trader or Limited Company?: The Difference

Income Tax & National Insurance

Income tax and National Insurance rates vary between employees depending on their income and personal circumstances (i.e. marriage, children, disability, etc). These rates usually change during the yearly budget so it is important that you keep note of any changes. For more information, visit our pages on:

• Income Tax
• National Insurance Contributions

Value Added Tax (VAT)

Each year the Government sets a figure – should it be the same as the previous year or different – which if met by your company, you need to register for VAT. If your business satisfies any of the following statements, you need to register for VAT: If your taxable turnover in the previous year exceeded £64,000 If your taxable turnover in the next 30 days is expected to exceed £64,000 Furthermore, if you are currently trading – or plan to trade – with suppliers in EU countries, you are also required to register for VAT within 30 days.
VAT - Value Added Tax

Are There any Other Taxes?

As well as the above, there are other forms of tax which are only relevant to certain kinds of business. Some imported goods are also liable to duties. Visit our article on Getting Started in Imports and Exports for more information Some goods and services are liable to excise duty. These include:

• beer, wine or spirits
• mineral oils
• tobacco
• betting, bingo, casinos, gaming machines, pool betting and lotteries

Visit the HM Revenue and Customs web site for more details:

Other Areas of Concern

In addition to the areas above, the following are also important and need to be taken into consideration.

Health & Safety

You are responsible for the effect your business may have on the health and safety of your employees and members of the public. You may need to register with the Health & Safety Executive (HSE) or with your Local Authority. For further information, visit the Health & Safety Executive website or phone 08701 54 55 00. Visit our article on Health And Safety Issues

Fire Precautions

You may need a fire certificate, particularly if you’re running a guest house, hotel or residential nursing home. For general advice on fire precautions, talk to your local fire service.

The Environment

There are environmental regulations that may apply if your business:

• uses refrigeration or air-conditioning equipment, fire equipment or solvents for cleaning
• produces, imports, exports, stores, transports, treats, disposes of or recovers waste
• produces, imports or exports packaging
• produces packaging waste

The Environment Agency provides advice for business and industries, visit their web site or call 0845 93 33 111.

Buildings

You must take action if:

• a new building or change of use is involved
• plant or machinery is installed within an industrial site, but outside a building
• existing premises require structural alterations

Contact your Local Authority for further information. If you are still looking for premises for your business, visit the following:

• Finding & Using Business Premises
• Serviced Offices

Employee Rights

You must protect the legal rights of your employees. If you take over an existing business, you must usually keep the existing terms and conditions of employment. Visit our article Taking on a New Employee

Intellectual Property

‘Intellectual property’ describes things such as business names, patents and inventions. You should protect your own company name and logo, along with any inventions, product designs or copyrights. You should also respect other people’s intellectual property rights. For example, you can’t use the same name for your business as someone else doing similar work in your town. The Patent Office can provide lots of useful information and advice. The Patent Offices Intellectual Property Site Visit our articles on…

• Data Protection & Copyright – Copyright
• Patents & Trademarks – Trademark
• Patents & Trademarks – Patents

… for more information.

Fair Trading

The Office of Fair Trading (OFT) is responsible for protecting consumers by promoting effective competition, removing trading malpractice and publishing appropriate guidance. The OFT also issues consumer credit licences. To check whether your business is affected, see the OFT’s website or call 08457 22 44 99. For information about consumer credit licences, call 020 7211 8608.

Keeping Information About People

If your business involves keeping information about people, you will have to be careful about the sort of information you keep and how it is used in relation to the Data Protection Act. You will also have to register if you keep such information on computer. For further information visit the Data Protection Office site or call 01625 545 745.
Visit our article on the Data Protection Act Information for more information

Licenses

A licence is required for many businesses, not just the obvious ones like casinos or public houses. For example, you need a licence to run a hotel, a guesthouse, a mobile shop or to be a hairdresser. You should always check whether your business requires a licence to trade.

Insurance

It’s good practice to have insurance to cover the loss or theft of your business property, as well as other types of possible losses. It’s also compulsory to have public liability insurance, which will often come as part of your contents insurance policy. Visit our Commercial Insurance for more information

Providing Services to Disabled People

Under the Disability Discrimination Act 1995, you must do everything you can to make sure that disabled people can benefit from the services you provide. For further information, call the Disability Rights Commission Helpline on 08457 622 633.

Starting Business Information Guide

The Inland Revenue offer an excellent Starting Business information guide that will help you with:

• getting your new business off to a good start
• tips on keeping records
• the basics of income tax, National Insurance and VAT
• tax credits and allowances you may be entitled to
• how to get further help

The information guide page: (see notes below)

Notes

• 1. The guide is a PDF file. To download a PDF file you will need Adobe Acrobat Reader (free download):
• 2. The guide is a 1.5MB file and therefore will take some time to load with a 56k modem. If you have broadband, it will take approximately 1 – 2 minutes to download (depending on your connection rate).
• 3. If you plan to print the guide, there are 98 pages: paper and ink at the ready!

Relevant Articles

• Before You Take That Leap Into a New Business
• Were You Born to Manage a Business?
• How to Start a Serious Business With £2,000
• The Law and Your Business Name
• Red Tape Statistics in Small Business
• Company Formation Information
• Abbreviated Accounts for Small Companies