Starting a business for beginners

[bananapringle]

Hi,

Interested to know more about what the process is of starting up a business. I've read guides and some books but it just doesn't seem to be giving all the information, seems a bit mismatched and varies alot between who's giving it. Is there a complete basic guide somewhere?!
I've identified the process is to first

- Register with companies house or use a formation agent
- Register a business bank account

Almost everywhere i read doesn't indicate one must consider opening one. Nex thing i also read which isn't in anything i read is you cant take money out for personal use even if youre the only person in that company, so like how do you get that money and isnt it a little complicated? i get money from clients through paypal only.

so i'm just wondering what else i'm missing/where I can find out more or a walkthrough which includes this kind of info and what to be aware of

thanks

 

[Toby Willows]

Go sole trader route and all money that comes is yours. You are then taxed on anything that isn’t an allowable expense.

That’s it.

 

[ethical PR]

You can pay yourself if your business is making a profit.

But you can only do this once you have allowed for expenses and future committed expenses.

You also need to allow enough in your business account to pay taxes.

 

[Annoying Donkey]

You are paid from your own company by:
1. PAYE.
2. Dividends.
One hopes you know what PAYE is... (The P is pain in the ass! )
Dividends can only be paid if there is profit in the company and are usually paid at year end, though there is nothing to stop you paying interim dividends - so long as you can show profit.
Neither are particularly complicated, but both must be supported by documentation.

And note that a Director doesn't have to draw a salary, so no absolute requirement for a PAYE system, unless there are other employees. (Though for state pension, you might want to run one with a minimum salary.)

Oh, and there is a Directors loan account, where a director can be advanced money and is usually cleared by subsequent dividends/salary.

If you're being paid through paypal, then this is likely going to your personal account. Hope you're putting taxes aside...
You'll want a separate business paypal tied to your company bank account. Tax guys tend to view stuff coming to you as your income, not the company's.

 

[Socio South West]

- Register with companies house or use a formation agent
- Register a business bank account

There is far too much mis-information about this: You can start a business as a sole trader or partnership and buy and sell as you wish without a dedicated bank account to begin with.
The important thing is to keep careful records and accounts to corroborate transactions. If you do trade as a partnership, a partnership agreement is strongly reccomended.

As soon as the business reaches a reasonable number of transactions, then it is wisest to have a dedicated bank account.

You can then go on to create a company which is when the administration increases Despite the extra admin, many small businesses now do this as it is usually more tax efficient under current tax structures.

As a sole trader you can effectively draw money from the business as and when you wish, and record this as drawings. If you incorporate, even as a Director, you then become an employee of this notional organisation from which you will receive a salary: After that there are a few ways to get money (ie profits) out of the company which you should discuss with your accountant.

The major difference to be aware of between a sole trader and an incorporated business is that as a sole trader or partnership, you remain personally liable for all aspects of the business's debts.
In a company situation the debts are assumed by the Company and even as a director you cannot be personally pursued for them unless you have given a Director's Guarentee to a particular debt.

Hope this very simplified explanation helps.

 

[Mr D]

.

If you're being paid through paypal, then this is likely going to your personal account. Hope you're putting taxes aside...
You'll want a separate business paypal tied to your company bank account. Tax guys tend to view stuff coming to you as your income, not the company's.

Paypal account can be set up to be a business account and paid into a separate account.
Plenty of businesses don't have paypal going into a personal account.

 

[Freelanzguy]

There is no right or wrong answer about incorporating a business. General info will always be biased and doesn't offer specific advise for your circumstances / business. As Socio South West suggests seek personalised advise.

 

[The Byre]

There is far too much mis-information about this: You can start a business as a sole trader or partnership and buy and sell as you wish without a dedicated bank account to begin with. The important thing is to keep careful records and accounts to corroborate transactions. If you do trade as a partnership, a partnership agreement is strongly recommended.

This!

And all the other stuff he said!

There is a full outline about the wheres, whens, hows and ifs in the book 'Starting a Business for Dummies' by C.Barrow. Read, learn and inwardly digest that and other books, BEFORE you venture out into the hard, cruel world of business!

 

[evaughans cleaning]

Hi,I didn't have a business account when starting.i used a separate account and all transactions went via that.mainly via bacs.keep receipts and invoices for everything as end of yt? They will be tallied up against your profit and expenses. Then you will pay tax due.
Once you get going you could look at opening a business account.

 

[JEREMY HAWKE]

If you have not developed the idea and don't have customers yet start off slowly tightly controlling the cash There is no point in wasting money to make things look good when you dont know if any profit will materialise.

Oh and my very good friends on here say you need an exit plan but I have been in business for three decades and don't have one but it is important I mention that as I like to promote their ideas as they always promote mine

@Mark T Jones

 

[Tom Davies]

Apply for a sole trader. That's what I did.

I sell on Amazon and being a sole trader rules!