1. How to Start a Business in Knutsford

What You Need to Get Up and Running in 2018

Small Business Advice For Anyone Looking to Become Self-Employed in Knutsford

Introduction

So, you want to become self-employed and start your own company. Congratulations! To guide you, we have put together a few ideas to help you get going and become a Small Business Startup in Knutsford (an SME). Be warned, this page can be exciting, refreshing, daunting and off-putting, but if you are resilient enough, and you have to be if you’re going to be your own boss and fend for yourself all alone out there in the big bad world, understanding what you have to take on will better arm you for a more enduring and enjoyable ride.

It’s not always fun when starting a small business or being a business owner, there are always going to be ups and downs but, if you do it right, you could be rich in not just business success but in your personal life, too. This guide is to help open your eyes to a few things and get you thinking, so please don’t rely on all of the facts because they change like the wind; hence, we have included links to further develop your knowledge… right at the source, including a Resources section at the end of the guide.

Bookmark this page so you can refer back whenever you need to.

FACTS

Only 40% of small businesses survive within the first five years
‘SME’ means Small- and Medium-Sized Enterprises with fewer than 250 employees
In the UK, 2016, there were 5.5 million private SMEs
Up 97,000 from the year before
99% of all businesses were SMEs
Total SME employment was 15.7 million
60% of private sector employment came from UK-based SMEs
SMEs combined turnover totalled 47% in the UK’s private sector
Total annual sales for SMEs reached £1.8 trillion for 2016
Yes, TRILLION, and you could be a part if it very soon!
2017 figures will be released soon!

Index

National Insurance Contributions
VAT
Insurance
Expenses
Bookkeeping
Accountancy
Sole Trader
Limited Company
Partnerships
Licenses and Permits
Penalties, The Law and Going to Court
Finance
Choosing Your Niche Market
The Competition
Suppliers
Pricing
Taking Payments
Types of Business Model
Place of Business
Employees
Who Are Your Customers
Put Your Selling Hat On
Resources

1. National Insurance Contributions

Like to or not, we all have to contribute towards society, and NI Contributions is one from the long list. If you’re self-employed, you will probably need to pay NICs as well as income tax. This currently includes Class 2 NICs (a flat rate charge on the self employed) and Class 4 NICs (contributions based on profits made).

You usually pay 2 types of National Insurance if you’re self-employed:

Class 2 if your profits are £6,025 or more a year
Class 4 if your profits are £8,164 or more a year

How much you pay

Class 2 – £2.85 a week
Class 4 – 9% on profits between £8,164 and £45,000, and 2% on profits over £45,000

You need to tell HMRC that you have started / starting a business in Knutsford, and you can do so on their website. It is imperative that you do so because you could face a fine if you don’t. You can learn more here https://www.gov.uk/self-employed-national-insurance-rates

2. VAT

Currently, in 2017, a business doesn’t have to start charging Value Added Tax on its sales until there’s an annual turnover of £85,000 (total sales going through the till). One can, however, decide to opt in long before. You will basically become a glorified tax collector working on behalf of the government having to keep a tight record of how much has been collected. It’s not at all funny because it costs money and valuable resources to do so! You will be surprised just how many businesses located in Knutsford collect VAT.

You will also be required to keep exact records of what purchases the business made and then calculate the VAT from each sale, totalling them up for the year. The difference between the amount you charged customers minus the amount the business paid for purchases, will be how much VAT that you’ll have to send to HMRC. There will, in some instances, be situations when a business will be able to claim back an amount of VAT due to spending more VAT on purchases than in the collection of sales.

There are quite a few benefits to becoming VAT registered, and one of them being that it comes across to customers (or potentials!) that your business is legitimate, and it’s far more likely to make a sale than not. It could also be an ego thing (“Hey look, I’m VAT registered”). But it’s definitely a trust thing, though (you do want to be trusted, don’t you?) plus, if you are not VAT registered and you resell products that you bought from a supplier, chances are that you will build-in the VAT that you were charged and thus your outgoing prices to your customers go up; meaning that if you are going to charge VAT, they can claim it back, and hence your prices will actually be cheaper for them to buy from you.

Do you see how complicated it can get already?! Stick with us… For the time being, though, shelve the idea until you have your feet firmly underneath the table, and then start to branch out. It will be wise to seek out an accountant in Knutsford because they will offer some of the best advice for being self-employed. To help you, here is a list of accountants in Knutsford

You can read more about VAT here https://www.gov.uk/vat-businesses

3. Insurance

Like most things, business insurance is also a minefield because it depends on what kind of operation that you are running. Do you have cyber insurance (do you need it?). Cyber insurance can provide cover for business interruption caused by a cyber-attack or incident, data breaches, cyber extortion, damage to digital assets, media liability, and some third party costs.

Do you have employees etc? Some types of business insurance are required by law. If you are an employer, you are legally required to have Employers’ Liability Insurance which covers the cost of compensating employees who are injured or become ill through work.

What about property protection, and will you need that, too? The physical structure of a business premises and your business stock are also very important components to protect. Insurance, as you can already gather, is a massive subject, but we can provide you with a very informative link here http://smallbusiness.co.uk/essential-insurance-cover-small-business-guide-2540271/

To help you, here is a list of insurance companies in Knutsford

4. Expenses

Every penny that you spend on the running of your business… GET A RECEIPT! These will all add up throughout the year, and they can be put against the amount of profit the company has made and then deducted, leaving you with the amount that you will most likely pay taxes against. Remember the first part above, National Insurance Contributions? Well, this is a huge part of the equation.

There are quite a few topics to be discussed here but, for now, we shall just cover a few of the basics:

If you work from home in Knutsford, you will be able to claim back part of the running costs of your house expenses, including electricity, heating, telephone etc. It is advisable that you speak to an accountant (you will need one at the end of every financial year anyway), and they will put you straight on what exactly is allowed. It’s usually a percentage of the square footage if it’s a small office that you work from, but if it’s that AND your garage (let’s say, for shipping out products), then it will be more.
Running a vehicle will also incur costs, and depending on your mileage and what you do, you will be able to put quite a considerable amount against the end of year profits so you pay less tax. Travel costs will also include a bus, train, plane, boat etc., and don’t forget to keep your receipts if you stay in a hotel, but it HAS to have been used for business purposes only. Don’t start to get ideas about going on holiday and putting it against your business…
Computers are usually set aside by your accountant over a five year period and is regarded as depreciation; companies don’t generally write-off the entire purchase of a computer in one fail swoop.

You’re getting the idea, right?, that starting a business in Knutsford can be a good thing if you follow the guidelines. You will learn the many pitfalls of running a business but also the long list of benefits that one is fully entitled to, just as long as the rules are not broken. If they are, expect a heavy penalty (see the below section which covers Law below).

5. Bookkeeping

As mentioned, you have to keep all of your receipts because you will need them at the end of each trading year. It is highly advisable to keep on top of your bookkeeping for it will put you in good stead further down the line. The lazy among us don’t do much; they have papers all over the place and then, because they do that, they tend to lose out on claiming some of that at the end of the year. Losing receipts is not a very good idea!

The best thing to do is to either hire a bookkeeper who will spend a few hours a month keeping your paperwork in order, or you can do it yourself. The latter is more advisable because it will give you a complete understanding of the operation. It’s best not to go headlong into the night without a care in the world… it will catch up with you eventually, and. you. will. hate. it. Your future self will thank you if you keep on top of your receipts. Guaranteed.

If you have a computer, try using a spreadsheet program (you may have heard of Microsoft Excel); it’s a page full of empty boxes (rows and columns). If you take two columns, one for ‘In’ and the other for ‘Out’, and you enter the amount of each (incoming) receipt / (outgoing) invoice into the correct columns (either incoming sales or outgoing expenses), you will have a nice long list at the end of the year that will even self-calculate each column for you. All you have to do then, is subtract the two. It’s a basic idea but many small businesses use this concept.

If you don’t particularly get along with computers and technology in general, try buying a double-entry book. It is designed with bookkeeping in mind and runs similarly to the spreadsheet idea mentioned above. The double-entry book is THE original method of bookkeeping and is centuries old.

If you really are useless with your receipts, at least use a shoebox!

To help you, here is a list of bookkeepers in Knutsford

Coming Next

7. Accountancy
8. Sole Trader
9. Limited Company
10. Partnerships
11. Licenses and Permits
12. Penalties, The Law and Going to Court
13. Finance
14. Choosing Your Niche Market
15. The Competition
16. Suppliers
17. Pricing
18. Taking Payments
19. Types of Business Model
20. Place of Business
21. Employees
22. Who Are Your Customers
23. Put Your Selling Hat On
24. Resources

DO YOU NEED OUR HELP?

There’s more to starting a business than meets the eye, but we can help with:

Website design
Hosting
Email setup
Domain name registration
Social media
Getting found on Google
Logo Design
Print Media etc.
…AND we are based in Knutsford!