What is the next stage of setting up my business?

[JoyDivision]

I have done the market research and I have worked out a niche.

I am assuming my next thing is to produce a business plan? I probably won't need any outside funding becuase it I have all the equipment already and have enough money for advertising.

One of the major things I have not worked out yet is what the legal structure of the business should be. I expect my turnover to be less than £20,000 for the first couple of years.

I will need to be VAT registered because most my customers will be VAT registered.

I am thinking the best thing to is setup a LTD company, but is it true you need two directors on the form?

I will be working form home so the only real office expense I can see is that I will need a second phone line.

 

[fastfences]

Hi Joy,
You will get more 'legal' advice than mine, but in the interim, No, you don't need 2 Directors. My Co. (formed by Quick Formations) which can be found through this forum, is structured with 1 Director and 1 Secretary.

I feel you may need some good advice re this: If your projected turnover will be less than £20K, will your margin sustain enough to meet costs of Annual Returns, phone and maybe some more advertising, stationery and a small salary? I recognise we all 'do it tough' when starting, but you don't seem to have much room for error. are you maintaining other employment whilst you're starting?
cheers, Nigel

 

[clairemackaness]

You sound like a sole trader, only bummer is if you start out badly you can go bankrupt. I'd only go limited if you foresee this happening. You can always go back if things work out well

 

[JoyDivision]

Its quite difficult for sole traders to get work though isn't it? If I am setup as a sole trader how to my clients know I am not just an over night business?

There is little chance of my going bankrupt, even if I do I don't own anything anyway. I am currently on the dole and I am not even spending all that. I can live off £200 a month for the first few months.

I will need insurnace as well no matter what way the business is structured.

I have bought all the legal software in the last 12 months, and I already own a PC so in terms of equipment I need nothing. Stationary can all be done in house, (my parents have a laser printer).

I will have about £500-£700 working capital to set the thing up, but much of that is my student overdraft which is still interest free.

 

[Stationery-Direct]

How will the customer know you are a sole trader? all your bank accounts, stationery etc etc will be in your business name and there is no reason for the customer to even look into this. Most people on here are probably sole traders with successful businesses.

If you are on the dole you will have to declare your earnings straightaway, if you work for less than 16hrs a week Im sure that you can still claim, I think that they also give you some money when you finally sign off and start your business full time, not 100% sure but might be worth enquiring about. You also sound like a prime candidate for a Princes Trust grant which you should also enquire about.

Good luck and if you need any Stationery then you know who to call ;-)

 

[JoyDivision]

I doubt I will be able to do anything with the princess trust becuase I live in a good area, I have good qualifications and I have just graduated, from what I can tell the Princess Trust is mainly for these on job seekers who just can't get a job.

With this kind of business it will take a couple of months from setting up until I get any income.

They will be able to tell I am a sole trader becuase I won't have limited after the company name.

All the profesional web development companies I have seen are limited.

I am just so confused because some people say be a sole trader others say you should not even consider going into web development if you're not a limited company.

I am also starting a part time course on monday which is designed to help graduates get graduate level jobs, but it also covers self employment, I've covered it all at university anyway but it will at least get my out of the house

I also have a job interview on Wendesday so if I do get a job I will just puit my business idea on hold.

 

[Marina Stone]

There is little chance of my going bankrupt, even if I do I don't own anything anyway. I am currently on the dole and I am not even spending all that. I can live off £200 a month for the first few months.

Have you approached your officer at the job centre about starting your new business? There is an organisation called Inbiz www.inbiz.co.uk who can help you start your new business and provide you with a free personal adviser, courses etc. You can even still claim your allowances whilst on the programme and the money you make in the business is yours once you come off the programme.

Worth a try!

Marina

 

[clairemackaness]

I'm an employment advisor and can advise you to get down the Jobcentre ASAP. If you want to set up your own business and have been signing on, they will give you a 3 month grace period to set up whilst still paying your dole money.

The pricess trust supports any innovative youngster who wants to start a business, it is not aimed at low level education or poor areas.

What is your business idea? I work for the Learning & Skills Council and have lots of contacts with funding bodies etc and can probably help. If you dont want to put your great idea on the web, then why not PM me.

 

[JoyDivision]

Thanks, its not really an idea as such as its an established market. However I want to setup a web development business providing high quality websites and consultancy to small businesses.

I want to provide that personal feeling that is lacking with the bigger companies. I will also do some multimedia authoring as well as I also have skills in that area.

 

[DuaneJackson]

How will the customer know you are a sole trader?

I think it's a legal requirement to have "Company Name t/a Your Name" (t/a = Trading As) on paper work, invoices, etc.

I suspect the accountants here might disagree, but being in the same business you are entering I do think it's worth setting up and trading as a Limited Company purely for image reasons.

 

[JoyDivision]

How will the customer know you are a sole trader?

I think it's a legal requirement to have "Company Name t/a Your Name" (t/a = Trading As) on paper work, invoices, etc.

I suspect the accountants here might disagree, but being in the same business you are entering I do think it's worth setting up and trading as a Limited Company purely for image reasons.

Yep this why I wanted to go down this route, if I was a shop it would not really matter, but in web development image is everything.

I am well aware it will create a lot of extra paper work and I am not bothered about the money so if it does cost more being a LTD its not the end of the world. It may generate more jobs in which case the extra paper work will be well worth it.

 

[Enigma121]

How will the customer know you are a sole trader?

I think it's a legal requirement to have "Company Name t/a Your Name" (t/a = Trading As) on paper work, invoices, etc.

I suspect the accountants here might disagree, but being in the same business you are entering I do think it's worth setting up and trading as a Limited Company purely for image reasons.

I'd disagree here. It depends very largely on the market you are aiming to capture. If you are looking for medium / large business customers a Ltd company is a must.

Smaller businesses / domestic customers don't really care, as long as you are cheap as chips and produce good quality work. BTW it's illegal to claim you are a limited company if in fact you aren't.

There is no bonus to companies that are VAT registered if you are or are not VAT registered.

If you are, you charge VAT and they claim it back. If you aren't you don't charge VAT period (until you reach the magic turnover figure). VAT registered customers don't have a problem, because you didn't charge VAT in the first place.

Image should be tailored for your target market, just be clear on who this is...