Welcome to the first in our Startup Smart Series. This series of articles is intended as a quick reference guide to the things young startups need to know and provides some tips and tricks for savings cost and knowing what to expect. With a little bit of knowledge and creativity you can startup your business for a relatively small amount.
In Part 1 we focus on the clerical/administrative tasks you’ll need to undertake to set up your business. We’ll review the what, whys and hows of each task, the different options available to you and the prices of each so you can choose the method right for your budget.
For illustrative purposes, we’ve created 3 different budget levels depending on your needs:
- Super Saver – the startup approach for those with very little cash;
- Cost Conscious – where you have a little bit more than nothing to spend, but are still on a very tight budget; and
- Restrained Spender – still starting up on a budget, but where you can afford to have someone else do some of the tasks.
Which approach (or mix of approaches) you choose will depend on the business you are starting, your budget and the skill set of those in your team.
|Registered Office||Why?The very first thing you’ll need to do to form a company is a registered office address. This is the official, physical address (not PO Box) where HMRC and Companies House can send documents to you.
Whether you intend to work from home, your local coffee shop or are lucky enough to have a business premises, you will need a registered address. If you do have a business premise (ie a shop or office) you will be able to use this, otherwise if you work from home just beware that most mortgages and rental agreements prevent you from using your home as a business therefore you’ll need to hire a registered address from a service provider.
If necessary hire a registered address or use the address of your business premise. In the StartUP LunchBox Resource Database lookup Office à Registered Office for service providers that offer registered addresses. In addition some company formation agents may also offer a registered office as part of formation packages.
Questions to Ask
Prices will vary depending on the location of your registered address. For instance, Mayfair, London addresses will be more expensive than Manchester.
A few examples of popular service providers include:
One Office – £10/mo + £30 setup (London);
Small Firm Services – £40/year (non-London); £9.80/mo (London city)
Companies Made Simple – £45/year (London)
Typical Costs Per Year (Ex VAT)
Super Saver = £40
Cost Conscious = £72
Restrained Spender = £150
|Company Formation||Why?If you aren’t sure if registering a limited company is right for you consult Business Linkto learn more about other options like being a sole trader or a limited liability partnership. Most people will want to operate via a limited company in the medium to long term though, as it protects your personal assets from the business’ creditors.
Fast Track: Same Day
Standard: 2 Days
You can either choose to form your company yourself or use a company formation agent. Either way you’ll need to have:
In addition you’ll need articles of incorporation. Companies House provides model articles of incorporation that can be used.
Whichever route you take you should review the Companies House – Formation Guidance. In particular note that when choosing a name for your business, some words are restricted.
Using an Agent
Company formation agents will generally ask you to fill out the relevant information online and then send the paperwork to you either via post or electronically depending on the package you have selected. There are numerous packages on offer; choosing one depends on what materials you want or how quickly you want the company incorporated. Look under Office à Company Formation/Corporate Secretarial in the Resource Database for service providers that offer company formation services.
Alternatively you can register your company online directly with Companies House: Companies House Incorporation. Companies House will provide you with electronic copies of: certificate of incorporation and memorandum of association.
Being a registered company comes with some record keeping obligations. Once your company is formed, you’ll need to keep the following information, not all of which you will have from the start. Some items can be provided by company formation agents otherwise these can be created with relative ease.
What to look for:
How Much (ex VAT)?
Saver = £18, Self-filing with Companies House
Cost Conscious = £35, Company Formation Agent with electronic documents – £35. (inc share certificates)
Restrained Spender = £70, Company Formation Agent with electronic and hard copies
|Business Bank Account||Why?You need to keep your business finances separate from your personal ones, so you’ll need a business bank account.
Couple of weeks
The best way to find out which business bank account is right for you is to use a typical online comparison site. The main differences will be the account fees and freebies that the banks throw in.
You’ll need to have the following information to hand:
What to look for
|Virtual Office Services||Why?If you have a business premises you’re unlikely to need mail forwarding, but if you work from home and don’t want to give out your address or if you want to use a virtual address you’ll also need to include mail forwarding.
Similarly you may want a telephone answer service, if you don’t want to give you out your own telephone number. This will just depend on the type of business you have.
Hire a virtual office services company. To find providers go to the StartUP LunchBox Resource Database and select Office à Virtual Services
What to Look for:
How Much (ex VAT)?
Pricing variablility will depend on the number of calls you receive and the level of personalised attention. Some providers may offer dedicated staff while others may rotate through a call center.
Telephone/message Services: £20 – £150/mo (dependent on number of calls and minutes)
Mail Forwarding – £15/mo – £45/mo
|Tax Registration||Why?Once your company has been registered with Companies House HMRC will automatically be notified of your formation. You will then be sent information from HMRC regarding their services and forms they require new companies to fill out. Further information can be found here: HMRC – New Companies.
Further to basic registration you should also consider if you need to register your company for VAT. Your company will be required to register if your sales for the last 12 months are over £73,000 or you expect to go over that amount in the next 30 days, but you can also choose to register voluntarily. Registration can take 4-6 weeks however if you application is referred for further fraud checks it can take up to 6 months. HMRC – VAT Registration
Normally 6 weeks
Referred applications can be 6 months
If you have an accountant, they can do this for you, but it is relatively easy to do yourself. HMRC provides guidance and an online registration service HMRC Registration.
What to look for
Just be sure to fully explain your business to HMRC this is especially important if you are voluntarily registering. Providing a clear detailed account of your business activities will help prevent your application from getting referred for further checks.
How much (ex VAT)?
Super Saver = £0, DIY
Cost Conscious = £0, DIY
Restrained Spender = £100, accountant (sometimes Company Formation Agents also offer VAT registration)
|Business Documents||Why?There are a number of laws which require you to display official company information (ie company number, registered address, etc) on certain documents.
You are required to show your business name on the following items:
You must display the following on all its business letters, order forms and websites:
Just add a standard footer to your letterhead, emails, invoices, etc which includes the required information. These days you can do this yourself and with lots of documents being sent electronically there shouldn’t be too much in the way of printing costs (business dependent, of course!). If you do need to print letterheads and other stationary you can still do this in low volume professional with your home or office computer.
What to look for
How much (ex VAT)?
All = £0, Try to use documents electronically or print small volumes as necessary yourself.