Setting Up A Small Business
Many individuals and groups in Britain set up their own businesses every day. According to Companies House, almost 25,000 new businesses are set up throughout the country every month. There are various reasons as to why people may choose to start their own business. Firstly, many people like to be “their own boss” and not have any one to answer to at work. This allows people freedom to leave behind the hierarchal structure of the common workplace. Secondly, a lot of people create their own business so they can be in control of decision making and steer the company in the direction that they wish it to.
Thirdly, new businesses are often set up as the result of someone following a new idea or passion that they wish to take to a new level and offer to people. This allows people to enjoy work more and this passion often translates into exceptionally hard work and lots of effort being put in. The setting up of a new business in the UK is a relatively straightforward process as long as all the legal requirements and red tape are negotiated correctly. A number of items need to be considered in order that a new business is set up correctly and will not in the future fall foul of any legal mistakes or issues. Firstly, if the likely or actual turnover of a business is going to be over £70,000 per year then the company needs to be Value Added Tax (or VAT for short) registered.
The legal requirements behind being registered are twofold. Firstly, when registered to pay VAT, businesses must pay all the VAT they receive on their sales to the Inland Revenue. Secondly, businesses can claim back any VAT they are charged on purchases they make through the company. Secondly, every single company that is set up in the United Kingdom is required by law to take out compulsory insurance. The reason for this is to protect any employees, third parties or members of the public in the event of a claim. Obviously this adds to the cost of setting up a business. Premiums on these insurance policies obviously are vastly different depending on the risks involved in the businesses activities. Thirdly, it is a requirement by law that a number of legal documents and forms be filled out in order to start up a business. These forms and documents include the Articles of Association and Terms and Conditions of Sale. These documents must be rigorously checked and error free in order that they are legally binding.
Finally, another obligatory legal requirement in the United Kingdom is that a Company Secretary and at least one Director are named an appointed for the company. Overall, as can be seen from the sheer volume of new businesses set up in the United Kingdom every year, it is a fairly simple and straightforward task. It is however, elementary that all legal requirements are completed and followed in order to make sure the business is set up soundly and is given a good start.
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