Original version published 30 December 2021.
There are around 5.5 million small business enterprises (SMEs) currently operating in the UK – this accounts for 99.9% of the UK’s business population. SMEs account for three-fifths of the private sector workforce and around half of the turnover in the UK private sector. As well as being vital in building and developing strong communities, SMEs play a vital role in the UK’s economy. There has never been a better time to start a business. Read this blog to find out more.
If you’ve been sitting on a brilliant business idea for some time, it’s likely that you’ve got a name in mind too, but don’t be hasty. It’s worth thinking about future expansion plans and whether the name will remain relevant. Bear in mind that your business name should not cause any offence, be misleading or give rise to any obvious confusion.
If you want to check whether your name is available, search on the Companies House name availability checker. You should also check the UK Intellectual Property Office’s Trade Marks Register to ensure that the proposed name does not infringe on an existing trade mark. Running these searches is a quick way to ensure your proposed name has not already been registered and could protect you from future potential name infringement issues.
Decide on your business structure and register with HMRC
Whether you operate as a sole trader, partnership, private limited company (LTD) or limited liability partnership (LLP), your choice of business structure is a commitment that will affect the amount of tax you and/or your business will pay and which determines whether you are eligible for certain tax reliefs and grants. It also impacts the administrative burden imposed on your business (eg the amount of tax admin and other filing responsibilities you must meet). Moreover, your choice of business structure will impact the liability you’re exposed to as an individual (eg your liability is limited if you run a company, but you’re liable for all of your business debts if you’re a sole trader).
Considering all business structure options from the get-go to decide which is best for you will save you time and money in the long run as your business grows.
Read How to set up your business for more information.
Brand it and claim it
After you’ve chosen a business structure and name, it’s time to secure a domain name (ie the electronic address for a website address), which may be the same as or very similar to your business name. For some, the availability of domain endings such as a ‘.com’ or ‘.co.uk’ will be the deciding factor for your final business name, so if this is important for your business, do check it first.
The nature of your business will determine which social media networks will be most relevant for you – you don’t need to have a presence on them all. Facebook and Twitter are popular and free networking tools that will help you market your business and reach out to customers. Bear in mind that there are character limitations for posts, so you may have to be creative with longer brand names.
It’s wise to act quickly to secure your social media account and domain names, as this will prevent cybersquatting (ie a social media account or domain name being registered by someone else for the sole purpose of selling it to you for an inflated price).
Start on solid legal ground
Every business will need legal documents at some point. However, even before you start your business, there are a number of legal documents you should consider creating, including:
- a Business plan – detailing what your business is, who is going to use your products/services and how you are going to make this happen
- a Founders’ agreement – setting out the relationship between the founders of an LTD
- a Term sheet – setting out the terms of a business investment
- Articles of association – setting out how an LTD is to be run and administered
- a Partnership agreement – creating a business partnership
- an LLP agreement – for entering into an LLP
- a Shareholders’ agreement – agreeing on key issues with other company shareholders
After you’ve started your business there are even more documents you may need, including:
- Employment contracts – to hire employees
- Confidentiality agreements – to protect your business ideas
- a Health and safety policy – to ensure the health and safety of employees in the workplace
- a Flexible working policy – to set out the flexible working arrangements available within your workplace
- certain Family-friendly policies – including a Maternity policy, Paternity policy and Bereavement leave policy
- a Data protection and data security policy – to set out the policies and procedures you will comply with when dealing with employee personal information and personal data
- an Employee privacy notice – to inform staff about how you collect, use, retain and disclose their personal data
There are various other employment policies you should consider putting in place too, if you employ multiple people. You could also make an Employee handbook to concisely communicate your approach to matters otherwise contained in various employment policies (eg absence and workplace management, family, and data protection policies).
Making sure you have a solid legal footing from the start means that you’ll be far less likely to fall into common legal issues in the future. For example, when hiring staff you must issue written terms and conditions of employment on the staff member’s first day or you could face a fine.
You can even use legal documents to save a bit of money. If you work from home, creating a home office rental agreement for yourself means that you can claim back some of the overheads of running the business for tax purposes.
Protect your ideas
Seeking guidance from friends, family and work colleagues when starting a business is one of the best ways to road-test your business idea to obtain free advice and honest feedback. But bear in mind that, if you disclose specifics or sensitive information too freely, you won’t be able to control how that information is used and who it reaches, so you may be putting yourself at risk of intellectual property theft. The easiest way to protect your business is to draw up a non-disclosure agreement.
There are lots of different types of funding available for your new business. The type of funding most suitable will depend on factors such as the amount required, your business structure, how long you need the funding for and many other factors.
There are a number of funding options available, including:
- loans (eg from banks, family members or other businesses)
- seeking investments by selling shares to investors
- grants (eg government or charity grants)
It’s likely that you will require certain types of insurance for your business. For example:
- employer’s liability insurance is mandatory for any company with employees
- third party motor insurance is mandatory for any company cars
- public liability insurance compensates members of the public for death, injury, or damage to their property due to your or your employees’ negligence
For further information, read Business insurance.
Make it a professional outfit
Open up a business bank account – this will help to keep your personal and business finances separate for tax purposes and will make those yearly calculations and filings easier to manage.
Now just add the finishing touch with a set of business cards to make a lasting first impression on those you meet – and don’t forget to detail social media contacts on your cards. These could prove to be the most valuable information when you need to reconnect.
Don’t be afraid when starting a business to take a risk and act on those ideas you’ve been sitting on. Some of the best businesses are born out of your everyday needs or surroundings, whether it be a gap in the market you’ve spotted at work or a problem that seemingly couldn’t be solved when speaking to a friend. Look for inspiration in those spare moments in your day. So what are you waiting for? Start building a business today!
If you don’t know where to start, or if time and money pose an issue, Ask a lawyer for advice.