How to start a business: Phase 2 – Getting going
It is said that there are two barriers to entrepreneurship. The first is that many never actually do it. They discuss an idea, think about it, maybe run some numbers but they ultimately decide it is not for them, or the time is not quite right.
Here at Boodle Hatfield we are lucky to regularly welcome founders who have overcome this first hurdle and we are there to help them overcome the second: pulling it off.
Throughout our near 300 years of experience advising some of the most successful business people in the UK and further afield we have consistently provided practical, considered advice to entrepreneurs seeking to grow, develop and protect their businesses.
This article is designed to be an introduction to some of the key practical matters an entrepreneur needs to deal with when they start a business. This guide deliberately focuses on the nuts and bolts of getting a business off the ground; we find that getting these basics in places frees up a lot of time for dealing with the more exciting aspects of being an entrepreneur.
This article is divided into the following two phases:
- Phase 1 – The Set Up
- Phase 2 – Getting Going
Phase 2 – Getting going
One of the things that surprises founders when they start their business is quite how many details they need to consider. On top of the basic requirements of developing products and signing up customers, there are a myriad of other issues to think about.
Exactly what is required varies between business, but the following checklist covers off the basic administrative and legal tasks that will be relevant for most. It assumes that the business will be structured as a private limited company. We have focused on the tasks that are less obvious but often trip people up, especially when they look to sell their business.
Registers, minute books and Companies House filings
- You will often be provided with your company’s statutory registers by whoever dealt with the incorporation of your company.
- The statutory registers set out, amongst other matters, who the shareholders of the company are, who the directors are and whether there are any charges over the company’s property.
- The registers will need to be kept updated; not only is this a legal requirement, but it is also something any serious potential investor in your business will want to see.
- Your solicitors or accountants may be happy to manage the registers for you.
- You should also keep minutes of all directors’ meetings and make sure the minutes are stored securely (they have to be kept for at least 10 years).
- You will also need to make sure your company’s filings at Companies House are kept up to date and that a confirmation statement is filed at Companies House each year. This is a short form which is designed to make sure the information held by Companies House is still accurate.
- You should ensure your company’s constitution actually does what you expect it to do.
- The main constitutional document of the company is its ‘articles of association’. This regulates the company’s internal affairs (e.g. how directors make decisions and are appointed, what matters need the consent of shareholders and how / when shares can be transferred).
- Unless you decide otherwise, your company will be given default articles, known as the ‘Model Articles’ when you company is incorporated.
- The Model Articles are not appropriate for all situations and, in particular, can make decision making more difficult for small businesses.
- Many companies therefore amending their articles of association to make them more appropriate for their situation. The articles can also be supplemented by a shareholders’ agreement which, unlike the articles of association, does not need to be filed at Companies House.
- All new employees must be given a document stating the main conditions of employment when they start work. Normally this takes the form of a full employment contract.
- Along with the employment contract you should also put in place an employee handbook and key policies (e.g. to cover IT use, complaints/disciplinary, social media, anti-bribery, whistleblowing, privacy, protection of sensitive data, health & safety, anti-bullying and harassment) .
- You should also check that each employee has the right to work in the UK before you take them on.
- You should also register as an employer with HMRC and get a payroll system set up.
- When you take on employees you will normally have to put them into a pension scheme. The Pensions Regulator has a useful guide that can be found here.
- As soon as you become an employer you should also take our Employers’ Liability insurance.
- You may considered setting up an employee share incentive scheme. These are often a good way to incentivise staff in a tax efficient way without compromising your cash flow. Our guide can be found here.
Tax and accounting records
- When you incorporate your company at Companies House you will registered for Corporation Tax at the same time. You will also get reporting dates for when your annual accounts need to be filed with Companies House and your Company Tax Return needs to be sent to HMRC.
- Depending on the size of your business you may also need to register for VAT.
- If you are looking to raise funds for your business you should consider whether to apply for advance assurance for SEIS and EIS (two government tax-advantaged investment schemes).
- You are also obliged to keep detailed accounting records for the company. Your accountant can likely help with this, but a good summary of the requirements can be found here.
Intellectual Property and Personal Data
- You should make sure that any valuable intellectual property created before the incorporation of the company is transferred to the company. This point is particularly important where the IP was created by third party contractor, who will unless otherwise agreed, normally be the legal owner of any IP they create.
- If you have any particularly important IP you should look to see if you can protect it through patents or trademarks. You will normally need specialist advice to do this.
- You will also need to make sure that your company uses personal data properly and in accordance with GDPR. The ICO have published some helpful guidance here.
- Nearly all companies will need to register with the ICO and pay a related fee. This can be done via the ICO’s website found here, which also gives related guidance.
Sector-specific regulatory requirements
- Companies in many sectors are required to register with a regulator and/or deal with sector specific regulation. These requirements are not limited to large companies, and are particularly common where companies interact with ordinary consumers or they handle money, food or potentially dangerous equipment.
Get in touch
The above is designed to give a quick overview of the key practical matters an entrepreneur needs to deal with when starting a business. For further information or advice tailored to your business and longer term objectives please do not hesitate to contact a member of our Drive team.