A lot of people dedicate much attention to things like product development, market research, marketing strategy, and other parts of the business before they have actually launched the business. While it is important to know the market and get familiar with your competitors, it is just as important to know the framework for business that you need to be following.
This covers all the basic things from setting up the company, to getting registered, getting your tax and finances sorted out, and successfully achieving a legal business status. Overall, the process is quite easy to follow and quick to complete, yet people still manage to get things wrong and end up wondering why their business isn’t registered yet.
The important thing is that you come to understand the basics and that you know what to do when you are just getting things off the ground. There is plenty of room to make changes later on and it is very easy to do so as well. There are, however, a few things that cannot be changed in the future and you only have the option to customize them when setting up the business. With the information in this guide, you can get off to the best possible start and become a business owner in no time at all.
1. Background Work
The first thing to do is to get your background information in order. This will include things like your market research, product research, your business plan, and anything else that will be required in your registration process. When you are applying for business registration, you will have to contact multiple people. Whether it is a government office or a private entity, they will have a particular set of procedures that you will be required to follow. Researching what is required from applicants beforehand will save you a lot of time and trouble.
If you have a physical business (a brick and mortar store) then there is no way around registration. A lot of people who have online businesses think they don’t need to register since they aren’t running a physical business. However, even though you may be serving international clients, you are still required to register as a business in the UK if you are operating in the UK or are headquartered in the UK.
2. Business Formation
There are a few options when it comes to registering your business in the UK. The most common form of registration is the sole proprietorship. You also have partnership registration, corporation registration, and limited liability company registration. Whether you are a single person in the business right now, you’re managing a small family business, or you want to register yourself as a service provider, you will need to have a registered office address to include in any governmental or registration forms. In the case of a sole proprietorship, you might be able to use a residential address, but it is still much more feasible to get a different address.
There are a number of companies that provide commercial addresses that you can use to register your business. This helps with the registration process and also gives you a bit more privacy and security. They are quite cost-effective, and you can even receive physical mail at this address. For businesses that otherwise don’t really need a physical address, this is a great solution.
The kind of structure you choose for registering your business will directly impact your business later on. For instance, the company structure will influence the kind of taxes you pay, the kind of legal requirements you are subject to, how easy or difficult it will be to raise capital and even the extent of liability of the owners or founders. It’s best to do your research before choosing the company structure suitable for you since usually, even though there is always the option of changing it later on, it is not as simple or straightforward as it may seem.
To successfully register your business you also need to show that you have the necessary licenses to operate that particular business. Certain industries will award licenses to businesses that permit them to perform a certain process, do a certain activity, or sell a particular product. A lot of people make the mistake of applying for registration prior to applying for the applicable license whereas, in reality, it is the other way around.
The thing that you should wait for till after registration is opening a bank account and applying for a loan, or trying to raise capital. To open a bank account, you will need to provide evidence that you are opening an account for a registered business. Similarly, when you seek the assistance of a lender, they will definitely want to know that you are registered and licensed and that you meet all the requirements that a business should.
Licensing can be a lengthy process, so make sure you get started on this from early on. If you are applying for something like a patent, it could take a while before it is approved.
4. Growing The Team
Every business aims to grow and become a more profitable and larger enterprise in the future. As you are registering your business in the early days you will have to register the founders or the partners or the board members. Later on, as more people join the company, you should also keep updating the business records. You may have started off as a sole proprietor but later added some partners.
Among those partners, some may be silent investors while others may be active members. Make sure you update your business records to accurately reflect the role of each member and clearly outline what they are contributing to the company, what the agreed terms of the contract are, and any other details that are important to define that person’s relationship to the business.
If you start off as a partnership today, you can always change the structure of your business and expand further in the future. For instance, if you want to raise more capital to invest in the business, but you’re not prepared to take on any personal risk, you can convert the business into a limited company and then pursue financing.
Similarly, the business can be downscaled, you can acquire other businesses and an existing entity can also be wound up. While you can do this on your own, it is highly recommended that you seek professional help throughout this process.