As an independent, family company, we understand both the thrills and challenges of running your own business. When setting up your own business you’ll likely have your own unique goals and plans, but there are always a number of financial factors to consider from the outset. These don’t just include the exciting projections in your business plan where you get to set out your hopes for the future of your company, but the statutory elements that sometimes get forgotten. We’ve put together a list of reminders in this blog post to help.
Business banking
If you’ve set your business up as a limited company in the UK (ie, you’ve registered it at Companies House) you will need to open a business bank account solely for your business income and expenditure. These accounts usually work in much the same way as a personal bank account, but they will have slightly different terms and conditions, allowing you to operate a business from them. They’re also likely to charge fees, although there are now more digital accounts without monthly fees. Most business accounts charge a monthly fee of around £5, and you’ll also usually pay for cash deposits and withdrawals, and sometimes for making other transactions.
Insurance
Business insurance should be considered an essential for any company, even if you’re just starting out, since a great deal of responsibility falls on you as soon as you open your start-up. Anything from a workplace accident to a data breach, or even something as simple as having your premises broken into could put your business at financial risk, and legal fees can quickly accumulate. It’s therefore important to have a robust insurance policy in place from the offset, and budgeting for this accordingly. There are a number of different types of policy, such as premises cover, professional indemnity and even cyber insurance, and a reliable broker should be able to tailor cover to your own needs.
Workplace pensions
All UK employers are now obliged to provide a workplace pension for their employees who earn over a specified amount. This includes automatically enrolling your employees into a workplace pension and contributing towards their retirement. The Pensions Regulator (TPR) is the organisation set up to ensure employers meet their duties, as well as to help you choose a pension scheme that meets the auto enrolment criteria. The legal minimum contribution for eligible employees is 8% of their qualifying earnings and you must pay at least 3% of this, although you can pay more if you wish. If you pay the minimum then your employee must pay the rest, to make it up to 8%. Clearly this is a considerable financial burden and should be budgeted for carefully when taking on staff and planning for growing your business.
Taxation
You’ll need to submit full accounts every year, and depending on the structure of your business, pay the relevant taxes. Generally speaking, tax is more efficient for a limited company than for a sole trader. You’ll need to budget to pay for both Corporation Tax from your business and income tax on your salary and/or dividends. You must also register for VAT if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000. National Insurance (NI) contributions are based on your personal earnings, and as with all taxes should be factored into your budgeting. Most business owners would agree that professional advice by way of a reliable accountant is essential to guide you through this element of running your start-up.
Founder loans
You’ll more than likely invest some of your own money into your business in the early days to get it started, to cover things like your website, office space, and necessary equipment. This is commonplace and can show your commitment to your company, however it is important to keep a record of your investments. By failing to establish clear boundaries between your personal finances and your business assets you’re risking scrutiny if audited by HMRC, and less chance of gaining credit when seeking further investment in the future. You could also make it more difficult to file your taxes, and even increase your tax liability needlessly.
As a business owner, you’ll understand that getting the right advice and building long term relationships with your clients is key, and it is this approach that has led to us becoming trusted financial advisers to companies across the country, who turn to us to meet their financial planning needs. We offer wealth management for companies and business financial advice on insurance, pensions, auto enrolment and trustee management services to help your start-up grow and prosper.
Our friendly and fully qualified team believe that by taking the time to understand you and your business, we can deliver a service that truly meets your needs. We’ll get to know you and your aspirations, then create a plan to take your business to where you want to go. Get in touch to book a free consultation, with no hard sell and never any obligation to take our advice. Our clients are diverse and have their own unique goals, and it is always our aim to build long-term, collaborative relationships with an emphasis on personal service and good, sound financial advice.
