If you buy equipment for your business, you may be able to get tax relief in the form of capital allowances. These allowances are for equipment, which you buy to keep and use in your business, such as vehicles, tools, computers  and business furniture. Capital allowances do not cover things bought and sold as part of your trade, but you can claim these as business expenses.

Update your employment status
 
You can register with HM Revenue & Customs online, and the website will walk you through the process. Make sure you do register as self-employed, because if you don’t you will face a fine.

Prepare your finances

Having the correct credit management systems and payment procedures in place is essential to ensure the smooth running of any new business. Efficient cash flow is vital as expenditure is high, especially in the first year, and systems need to be in place to ensure that money is coming into the business, as well as going out.

Be organised

Keeping full and accurate records from the start will make it easier to work out what you owe in terms of tax and National Insurance. All records must be kept for six years – both business and private. Failure to keep records could lead to paying too much tax or a fine of up to £3,000.

Keep the taxman happy

As a self-employed individual you will also be responsible for making your own contributions, this includes remitting your contributions on a quarterly basis. It is important to take care of your National Insurance for two reasons: firstly, you may end up contributing too much, and secondly, you will lose out on state benefits that are related to the amount of National Insurance contributions you have made.

Being self-employed requires you to complete and submit your tax returns. If you want to speed things up then you can submit a full tax return online – not only does this save on process time, but it automatically calculates your tax when you file your return online.  Whether you submit your return online or offline, make sure you check your tax calculation once you have received it, as this will form the basis of your payment.

Don’t wing it

Experienced professional advice can bring essential financial management procedures to your business, allowing you to concentrate on getting the company to where you want it to be

The business

It should start with the basics of your business. A cover sheet should outline the company name, address and current owners. Start by outlining the legal structure of your business and who owns it. Keep this brief as an investor is more concerned about how the business will operate in the future.

Then describe your business and the product or service that you provide. Explain why the product will be profitable and why your customers will buy it, whether your product is unique or simply better than other products on the market.

Try to give a break down of the market sector and its potential. You can use competitors to show how big the market is and what percentage of sales you think you can capture. 

All of these will tie into your goals and objectives for the business. The eventual aim for the business and how you expect to achieve that.

Marketing

The key to marketing is understanding your customers. You must be able to profile your target customer and their likes and dislikes accurately. This will help you understand how to position the product in the marketplace and how to price the product. You must also be aware of how your customer base is likely to change over time, whether it is declining or growing.

It should offer the reader a combination of clear description and analysis, include a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of each area.  Examples include:

• Market demand for your products/services
• Your competitors
• Your financial resources
• The skills within your company

The  SWOT will demonstrate that management is realistic about the company’s prospects. 

STEP Analysis

Consider the 4 areas of activity in relation to any impact (positive of negative) they may have on your business, now or in the foreseeable future.  As well as local implications, consider any movement in national, European and international situations, including future legislation, that may filter down to affect the business.

• SOCIAL – trends, changes in social acceptability, the changing needs of your customers.
• TECHNICAL – impact of technology on your business, your products and your customers
• ECONOMIC – employment trends, trading conditions, taxes
• POLITICAL – health and safety practices, employment legislation, trading legislation, licensing

Finance

This should include all the financial data on your business. Include any previous year’s accounts, up to three years if you can, as well as details of any outstanding loans or assets. Also include the current management accounts, cashflow forecasts and a breakeven analysis.

Make sure that realistic financial projections are outlined and that you provide different scenarios for sales, costs and cash flows for both the long and short term. Don’t be tempted to dress up the figures. Sales figures growing ever steadily will not impress a seasoned investor. Similarly, be realistic about your costs. Consumer products, particularly those on the internet, will need to plan for a large upfront marketing budget. 

Pre-Start up Costs

Insert the items of expenditure required before the business can start trading, such as

• Capital equipment – vehicles, machinery, equipment, furniture, tools
• Raw materials or stock
• Premises – lease, rent, purchase
• Promotional materials – business cards, flyers, adverts
• Fees – legal, professional, licensing
• Owners’ capital
• Commercial funding – bank loan, private loan
• Start-Up Grant
• Other source

Projected Operating Costs

From your market research, insert your estimated annual costs involved in operating your business, providing as much detail as you can, such as

Direct Costs

• Material
• Stock
• etc 

Indirect Costs (Overheads)

• Employee costs (wages, salaries, NIC, pension contributions etc)
• Planned capital expenditure
• Commercial rent and rates
• Premises – Heat and Light
• Machinery/equipment
• Insurance
• Advertising/Promotion
• Telephone
• Postage and stationery
• Professional fees a nd subscriptions
• Interest – Bank
• Finance repayments
• VAT
• Other expenses

Cash Flow Predictions

The Cash Flow Forecast containes the same information as you would expectto see in a bank statement.  The Cash Flow Forecast, does not show gain or loss in the value of assets, it shows only cash going in to and out of the business, with an opening balance at the begining of the month and a closing balance at the end.  In compiling this forecast, all you are doing is preparing a bank statement in advance.

 The management

This section should outline all background and experience of all the key members of the management team. You should attach CV’s for each individual and outline the strengths and weaknesses of the team as a whole.

The Executive Summary

The last thing written is the first thing that appears in the business plan – the executive summary. This is the most important section and summarises in two pages what is written in detail in 10 or 15.

This is where, among other things, you state the company’s mission statement – a few sentences stating what the business does for what type of clients, your aims for the company and what gives it its competitive edge.

The mission statement should combine the company’s business’ current situation with your aspirations.

Just as the business plan, the executive summary should be clearly written and be persuasive, yet it should balance sales talk with realism in order to be convincing. It should be no more than 1,000 words.

You should make the Executive Summary count, always think of the elevator test, if you are presenting your Business case/Business Plan to investors. If you can’t convince an investor of how good your business is in the time in the lift between the ground floor and whatever floor you exit on, you may have missed your opportunity.

See other information in this section including: Writing a business plan, Choose a company name, Forming a Ltd company, How to set up as a Sole Trader, 10 reasons to start up a business

You’ll need to establish your name before you think about filling out your registration documents as there are certain rules to consider.

The name you choose for you company must:

• Feature the word ‘limited’ or ‘ltd’ at the end. For Welsh companies the equivalent ‘cyfyngedig’ or ‘cyf’ can be used, but documentation must also state in English that it is a limited company.
• Not be made up of certain sensitive words or expressions (listed by Companies House) without the consent of the Secretary of State or relevant government department.
• Not imply a connection with central or local government
• Not be offensive
• Not be the same or similar to one that appears in the Index of Names kept by Companies House.

You can search the index of business names already registered on the Companies House website which is free of charge. If your selected name is too similar to another, an objection can be lodged within 12 months following the incorporation of your company and you could forced to change it.

See other information in this section including: Writing a business plan, Choose a company name, Forming a Ltd company, How to set up as a Sole Trader, 10 reasons to start up a business

Memorandum of association

This document sets out the following:

• The company’s name
• Where the company’s registered office is located – England, Wales or Scotland
• What the company will do – this can be as simple as to be a general trader

Articles of association

This is where you set out the rules for running your company. You must state how shares will be allocated and transferred, how the directors, the secretary and your meetings will be governed. The standard document used is Table A, of the Companies Act.  If choose an amended version of Table A, you must submit this version when registering. Once your company is incorporated you can only make changes if the holders of 75% of the voting rights in your company agree, so it pays to get this right at the outset.

Form 10

This document gives details of the first director(s), company secretary and the address of the registered office. Company directors must also give their name, address, date of birth, occupation and details of other directorships held in the last five years. For Northern Ireland use Form 21

Form 12

This document is the statutory declaration of compliance with all the legal requirements of the incorporation of a company. It must be signed by either one of the company directors or secretary named on Form 10, or the solicitor forming the company. The signing of the document must be witnessed by a solicitor, a commissioner for oaths, a justice of the peace or a notary public. For Northern Ireland use Form 23

Form 12 must not be signed and dated before any of the other documents are completed, signed and dated.

Where can I get these documents?

Form 10 and Form 12 can obtained from the Companies House website.

The memorandum and articles of association can be obtained from legal stationers, accountants, solicitors or company formation agents.

Cost of submitting the documents

The standard fee to register a limited company is £20 but for a same day service it costs £50.

If the registration documents are filed using the Companies House software filing service the fee is £15 for standard and £30 for same-day registration. However, to file electronically you must either purchase the suitable software, develop your own or go through an agent.

If you want to set up in business for yourself, you are not alone.  71% of all British businesses have no employees according to Department for Business Innovation and Skills (BIS) figures.