If you're looking for a straightforward, common-sense guide to incorporating a business, then you've come to the right place. We've compiled this comprehensive list of the key points you need to know in order to successfully establish your business in the UK.
Business Plan
It would be remiss not to start this list of essentials with the basics: your business plan. Without a business plan, your investors, lenders, and the government (should you choose to seek their help) will have nothing to go on but your word – and you can always be trusted, can't you? A business plan is also your insurance policy in case things don't turn out as you predict. It provides a road map to show how you intend to get from A to B, and crucially puts key decisions – such as pricing, market share, and investment – into writing, ensuring that everyone involved understands what is planned and why.
Legal Determinants
The law plays a critical role in any business, and when you're establishing a new business, it's all the more important to understand the different legal determinants that could impact how you conduct yourself and your business. A company's articles of 법인설립 set the scene for everything to follow, and they dictate what kind of business you are incorporated in (sole trader, partnership, limited company, etc.), who your directors are (& if you have any), how you conduct your affairs (domicile, registered office, etc.), and how you will be recognised as a legal entity (register your company name with Companies House, use E-in-Cs as your registered address, etc.). Once you've established your business, the articles of association will govern the conduct of your business affairs.
Registered Office
Your registered office is the office (or other physical address) where you conduct your business. The requirements for registering your company name with Companies House have eased significantly in recent years, so assuming you've chosen a decent corporate name, the only thing left to do is to choose your registered office and register it with Companies House. Don't worry – this task is relatively simple to complete. You simply need to go to www.gov.uk/register-business and follow the prompts.
Taxation
The government applies tax to a business's earnings at source, which means that they are payable in advance. This is usually the case with companies, who are subject to National Insurance and Income Tax (self-assessment method). The government also enforces various consumption tax (varying from 10% to 20% often depending on the product) and duties on imported goods. Depending on your industry, you could be subject to additional payment schemes in force within the UK government, such as the business rate and the investment duty. All of these things need to be considered as part of the taxation calculation when establishing your business. If you're looking for professional assistance, you could opt for accountancy services to help you calculate your business's income and expenses for taxation purposes.
Bank Account
If you're looking to raise capital to establish your business, the terms of the loan you secure will largely depend on the type of business you have. Banks are more likely to be willing to lend you money if you can show that you have a sound business plan and enough established trade contacts. As part of the application process, you will be required to open a business account with a bank. This account will serve as your access point to the cash you desperately need to establish your business. The terms of the loan will vary depending on the bank and the industry, but it's advisable to contact your local bank branch to find out what their criteria are for approving new accounts.
Financial Plan
A financially sound business, one that can withstand the sometimes harsh realities of commerce, must have a financial plan. A business plan that doesn't include enough detail about your finances is, quite simply, not complete. Incorporating a business carries with it a litany of costs – from legal fees to accounting fees to business setup fees – and the only way you can plan for these costs is by working them into your financial plan. This is especially important if you want to seek investment, as the venture capitalist will want to see concrete evidence that you can afford to pay back the loan you secure. Your financial plan doesn't have to be complex – a few simple income and expenditure sheets should suffice.
Operations
A business's operations are what it does to carry out its purpose: produce, sell, deliver, and collect payments for goods or services. The various components of your business's operations will depend on the type of business you have, but it's safe to assume that you will need to establish stores, offices, and contact with customers to carry out your trade. When you're establishing your business, you will need to consider the resources you have available, which could include staff, warehouse space, and vehicles. You might also want to look into using third-party contractors to help with specific operations (e.g., driving trucks, providing security, or managing accounting systems), depending on your needs.
Management Team
A business is only as good as the people running it. Your management team – the individuals who will own and direct your business – is among the most critical parts of your business plan. Your managers will be responsible for making decisions that affect the course of your business, so it's essential that these individuals are up to the task. If you're looking for investors, the Managers (also known as Key Person Insurance) will be your assurance that someone is in charge, and this person can be held accountable for business decisions. Your management team should consist of at least three individuals, with the additional member being a non-executive director who is accountable for financial and business matters – otherwise, it's simply a dictatorship (see the ‘E-in-Ce' scenario above).
The Bottom Line
What are the essentials you need to know in order to incorporate a business? Above all else, you need to know how much it costs. In most cases, legal fees account for the largest slice of the total cost, followed closely by business registration fees, and then audit fees.
Fees vary from business to business, but you can get a general idea by looking at other businesses in your industry. Don't expect to raise capital without paying for a legal and accounting consultation – but that's not all you'll need to set up your business. You will also need to rent office space, and purchase business cards and stationery.