Posted: October 25, 2018
Category: SMEs, Supply Chain Management

If you are thinking about setting up a company, it can be very overwhelming and tough to even think about where you need to begin. When setting any company up however, there are some key considerations that will help you launch the company with ease and in the most successful manner.

You will need to think about things such as the general planning of the company’s structure and funding it as well as smaller details which are vital to the company. The likelihood of your company failing is far higher if you do not take some key considerations into account. It is unfortunate, but around 55% of small businesses fail within the first five years, but no matter how small or large your company, you should give yourself the best chances of success by making sure you have considered a range of factors, practices and eventualities.

If your company is going to employ staff in any capacity, remaining compliant with IR35 Legislation, it is important that you have the financial aspects of your business in check before launch day. This includes setting up and implementing effective and manageable payroll software and solutions. This will help you make sure that your workers (and you yourself) get paid legally, appropriately and in a timely fashion.

company-structure

Choose the Right Structure for your Company

One of the most important decisions is going to be determining the legal framework of your business. Whichever legal entity you go with, it will have a significant impact on your taxes and the laws you must abide by. The three most common structures are:

  • Sole Proprietorship
  • Partnership
  • Private Limited Company / Personal Service Company

If you are starting up a small business, many people start out life as sole traders as this is much simpler to set up. As a sole trader, there are in fact, no formal accounting requirements and the profits and losses can be submitted to HMRC via your tax return through Self-Assessment when it is due.

However, for a growing business or larger company, there will be significant benefits associated with a private limited company that you should take the time to research.

Create a Good Business Plan

Many people overlook writing up a good business plan in their excitement for their new company. However, this will only waste valuable time and money and will ultimately need to be done at one time or another.

You should construct a cohesive and logical plan to set up a successful business. It can help you manage each aspect of your business and give you the time to amend and make any corrections as you see fit before it is too late; a business plan will give you direction to help bring your business to life.

Effective Payroll Systems and Software

Having payroll solutions and software in place is going to be a lifesaver for your company. Company payroll is a regular process which takes on the task of paying all staff members and dealing with their taxes, such as income tax, national insurance and student loans. Utilising the right payroll solution will help you to avoid human calculation errors and promote the success of your company.

A payroll system is generally one of the single largest expenses for many companies. However, it is vitally important in making sure all your funds are looked after and calculated correctly. Furthermore, it is very common for smaller businesses to make mistakes on their payroll each year, which can result in unpaid taxes, missed payments, penalties from HMRC and more. Additionally, an effective payroll system can help you manage umbrella companies you work with, saving you an abundance of time and effort.

How Does it Work?

The way a pay roll system works in general, is as follows:

  • Working out how much the company owes each employee every month
  • Determining how much each person owes in income taxes and UK National Insurance
  • Successfully delivering a payslip and a pay cheque
  • Ensuring the company pays sufficient taxes based on income and revenue
  • Helps with worker retention through more efficient business processes

Business Insurance Cover

Another expense for new businesses, is the purchasing of necessary insurance, which is very important and can be fatal for a company if it is not in place. This is especially pressing if you are a small business. If you are going to have employees then you will need employer’s liability insurance from the moment you become an employer.

Whilst public liability insurance and professional indemnity insurance are legal necessities, they do also offer valuable protection if something were to ever go wrong.

Funding your Business

Most businesses do require some capital outlay in order to get them up and running; the premises, office equipment, computers and software are all going to cost a potentially substantial amount of money. Therefore, it is important that you consider the most efficient way to pay for all of these expenses which are so essential to the functioning of your business.

Some people choose to use their savings or borrow money in order to get themselves off the ground. There are actually an ever-increasing range of alternative funding types which are available to owners of businesses, which allow prospective borrowers to steer clear of both large and small loans from other, non-specialised sources. Through these you will be able to really benefit from your understanding of your options.

The initial set up is a rather expensive part of the process but it will not be your only expense. You will need to get a regular flow of cash to pay for bills and any expenses associated with the business.