Starting up my own business - The Do's and Don'ts

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Starting up my own business - The Do's and Don'ts

23 posts & 15 voices | Started 1 year ago by Xan | Latest reply from simonlovell999

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Xan - Member

I the process of looking at starting up my own business any advice from those who have done it. Here’s a bit of background to my plans, and what I know so far

Looking to set up as a I.T Business analysis contractor.I'll be setting up as a Ltd company, and paying my self a wage (not to low as I want to get mortgages etc)I will be VAT registered (because I want to and hope that I will have to). Will be looking for jobs through I.T recruitment firms, and plan on securing at least a 6 month contract before leaving my current job. Also plan on getting some relevant training courses. bu plann on doing this after the company is set up so I dont pay the VAT. What other things do I need to look at . The obvious ones to me are.

Accountant.
Companies house registation for Ltd company, and putting all the relevant hierarchy in place.
Do I need public liability insurance.
Bank Account (got 2 years free banking promised to me already)
also Can I get a set up grant to pay for Laptops ect?

Any advice would be appreciated.

Posted 1 year ago #
Dylan08 - Member

Tescos Bikeshop Franchise???

Posted 1 year ago #
ourmaninthenorth - Member

The key advice you need relates to tax, and this is where your accountant comes in: when people (IT consultants) started using companies to avoid paying personal income tax, the government introduced the famous IR35 tax rules.

I've no idea if these still apply in the same way, but be mindful that ytou may find there is no tax advantage to trading through a company. Also, if you're paying yourself as an employee, then you will have to pay employer and employee NICs, which may - I don't know - be more costly than self employed NICs.

If you want limited liability, then consider a limited liability partnership. This is a separate legal entity (like a company) and your liability is limited under the terms of your membership, but it is tax transparent - i.e. it works just like a partnership, where the members (in an LLP they are not referred to as partners) pay normal income tax on a self employted basis. Obviosuly, for an LLP to work, you'll need a partner, but they could be "silent" and not share in any of the profits.

Oh, and if you set upo either, don't buy something off the shelf from your accountant - they'll charge you a fortune. It costs £20 to incorporate a company or LLP, and all the forms are on the Companies House website.

Posted 1 year ago #
Xan - Member

Thanks ourmaninthenaorth. I have heard alot about IR35. Think this only becomes an issue with long term contracts. Not sure this will be a problem at the moment the way things are in the market, but it is something to bear in mind.

The NI thing is something to look at. Really need to get an account. As for setting up company, will be doing this all myself, with the advice of a friend who is an IFA, and has some experience of this. Not paying an accountant a fortune to do this.

Posted 1 year ago #
Mackem - Member

An umbrella company might do the job just as well for you. You´ll pay ever so slightly more with a helluva lot less hassle.

Posted 1 year ago #
Xan - Member

I had looked at that, and was advised by alot of contractors not to do it. The problem is, no consistant income (I would pay myself only what I need to live, alot less than I'll be earning) and the fact that I would be looking at 40% on alot of my income, and maybe looking at 50% if I get a really good contract (can get up to £450 a day for some contracts) But is something to also concider. My fear is that I am not a great saver and if I earn it, I'll spend it. With a ltd company I can be a bit more diciplined with Dividends and oly spend what I need, and grow the business (if things go well I'll start buying property as well)

Posted 1 year ago #
sharkbait - Member

Also plan on getting some relevant training courses. bu plann on doing this after the company is set up so I dont pay the VAT

You can backdate your VAT.

Posted 1 year ago #
Philby - Member

Professional indemnity insurance may be worthwhile.

Posted 1 year ago #
bereavementmonkey - Member

think you can be considered and 'employee' now from 13 weeks continual service with one client.... So get a good accountant not a cheap one and make sure you pay the tax that you should otherwise it will come and bite you on the arse.

Your key is to make sure that the agencies use the appropriate contracts for the type of work... Supervised/un supervised and optin/out clauses! Also try and make sure you have more than one income stream (if you can) as then if you get investigated you can kind of prove that you were working for more than one client.

Posted 1 year ago #
chakaping - Member

Professional training or training related to running a business?

If the latter, take advantage of the free/heavily subsidised Business Link courses first.

If the former, Sharkbait is correct - I did it.

A few random observations based on running my own company for nearly two years...

VAT is easy, do it yourself.
TAX returns are not, pay an accountant.
Keep clear financial records from day one.
If you set up a Ltd company you will pay nothing like 40% or 50%.
Doing the accounts is never as bad as you think it's going to be - so don't keep putting it off.

Good luck!

Posted 1 year ago #
nickc - Member

I wouldn't necessarily employ an accountant straight away, if you've just set up you'll have nothing to count anyway, and they can be expensive. With a straightforward business model it's not that hard to do yourself. You'll need to be VAT registered. If you're going to have an office, you'll need some sort of public liability insurance. Also consider life/injury/sickness assurance. Contact local authority for grants for start-up businesses, they can help with advertising etc. Also consider joining the FSB, they're a bit fusty but they have free legal help, and can also help with finding grants etc.

If I might offer some advice? You're now a salesman. You may think you're in IT, but from now on you are just sales, your customers will assume you can actually do what you say, so it's all about the sales. Did I mention sales?

Posted 1 year ago #
Xan - Member

Professional training or training related to running a business?

Professional - Concidering doing ISEB Business Analysis courses. I'll look at this straight away then. The quicker I get this the mare choice of jobs I have.

I'm very good with financial record's so I'll have that in place, tracked and easily auditable, right from the start.

Thats my hope with the Ltd compay that I don't have to pay that allowing me to expand to other business enterprises as the funds in the business increase. Invest long term to keep the tax man at bay (hope there are none of them on here)

think you can be considered and 'employee' now from 13 weeks continual service with one client

Ouch, that could turn out to be sore. Good accountant it is then!! That cant be good for alot of contractors, concidering most contracts last c. 6 - 12 months.

Posted 1 year ago #
Macavity - Member

Somepeople find Contract Project Services Ltd at
http://www.blackdiamondumbrella.co.uk/ seems to work for them.
But being a sole trader is simple easy and painless http://www.hmrc.gov.uk/forms/cwf1.pdf

speak to the HMRC http://www.hmrc.gov.uk/selfemployed/tmastarting-up-in-business.shtml

Posted 1 year ago #
chakaping - Member

Oh, and don't be scared of the taxman.

They've always been really helpful and nice when I've dealt with them.

A breath of fresh air after dealing with other organisations supposed "customer services" departments.

Posted 1 year ago #
DaRC_L - Member

With IR35 there's a lot about the wording of the contract and whether you can be substituted - if you can't be substituted by 'the company' then IR35 applies otherwise it doesn't AFAIK.

When I was a contractor (and been looking into it again recently) Bank Account, Ltd Company and VAT Registration were the basics. The VAT registration means you can claim back the VAT on any business related 'stuff' (e.g.laptops) that you, ahem, your Ltd company buys.

Posted 1 year ago #
simonlovell999 - Member

I have just started up my business in IT as a Support technician and got loads of advice through Brave where they did a 6 hour seminar on starting up your business. I am registered as a Sole Trader through hmrc. Just getting my business cards out there and advertising. I be doing public, small businesses and private clientel. I am based in Bristol. Business link can help too

Posted 1 year ago #
simonlovell999 - Member

My business name is:

IT Support Tech
07787569913

Anyone maybe interested in help with there computers. Hardware and software problems, installations

Posted 1 year ago #
b r - Member

Sorry but you are not setting up a business, just working around the taxman.

Register with every agency. Join the queue.

Once you've got a contract, and only then - find a recommended accountant, get them to set up the business for you.

Posted 1 year ago #
simonlovell999 - Member

my business has been going for 3 years

Posted 1 year ago #
vinnyeh - Member

What b r says with the exception of delaying setting up the business. Nobody will pay you til you've got a company, bank account etc in place, and that takes time, so if you're going to need money from the off, sort it out.
Getting your first contract can be a full time job in itself in the current climate. I'd sort out training beforehand if it's really going to give you an edge- no point in getting it afterwards, is there?

Posted 1 year ago #
beanum - Member

With regards to the whole IR35 and tax avoidance area, when you set up a ltd company you will be invited to a free tax seminar in your local office.

Go

I was advised by my accountant at the time that the people who attend (it was dead boring and not really relevant to an IT consultant) are much less likely to be investigated...

Posted 1 year ago #
b r - Member

Simon, the comment was aimed at Xan.

I understand now from talking to a friend that its not quite so quick and easy to setup a business... Bloody white-collar inefficency.

Ten years ago I got a contract last thing on Thursday, and had a fully signed up VAT business by Friday lunch with the bank accounts sorted mid-afternoon the same day. Friend reckons its weeks now...

Posted 1 year ago #
simonlovell999 - Member

ok b r

Posted 1 year ago #

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