UK Starting Business
Topics, discussion and exchanges on business start-up, the economy and all things commercial.

UK Starting Business

Starting Business Faqs

1. Is starting a business expensive?
The actual costs of starting a business vary depending on the types of activities the enterprise will engage in and how much money is required in funding.

Most start-up businesses choose to begin slowly and cautiously spending only what they can afford and looking at ways to reduce the initial outlay.

Some business start-ups require little of no funding or expenses may only be incurred after a sale has been made. Internet based businesses is one example of where the start–up costs could be very low in the beginning.

2. Starting as a sole trader, what does it cost?
Sole traders are required to register with Revenue and Customs for which there is no charge. Using an Accountant to do this on a sole trader’s behalf may well incur a fee.

3. Starting business as a Partnership, what does it cost?
Start-up costs for a partnership are similar to that of a sole trader. Whilst there are no registration fees as such, most of these business types will draft a partnership agreement which may have a cost if professionals are used to create or verify the document.

4. How can I contact Revenue and Customs?
Revenue and Customs have several helpline numbers which cover various departments. The one that relate to starting a business is 0845 915 4515 which is open for 12 hours, Monday to Friday from 8am.

5. Should I register for VAT?
Vat registration falls in to two categories, voluntary and mandatory. All businesses are required to register for VAT when their turnover reaches £67,000, whereas any business making taxable supplies can voluntarily register without having exceeded the mandatory limit.

6. Can I choose to deregister from VAT?
VAT deregistration can occur if the value of taxable supplies fall below the 2008/09 threshold of £65,000. The business must of course register should the £67,000 limit then be exceeded at any time in the future.

7. Can a personal bank account be used for business or will a separate one be required?
There is no law which states that a personal bank account can not be used for business expenses. However, in order to prevent either type of expense or income being miss-analysed, it is far better to have separate accounts so that reconciliations can be carried out more efficiently.

8. When is it the best time to submit a VAT registration Application?
VAT registrations can take up to 8 – 16 weeks to be approved and for the business or company to be supplied with a VAT number. Therefore it is wise to plan ahead so that when the first taxable sale is made the VAT number is available.

9. Will a new company be able to trade abroad?
UK companies are generally permitted to trade anywhere in the world. In some countries there may be restrictions on certain types of activities and it is advisable to check with the relevant local authorities if a particular region will be a significant part of the business’ trade.

10. Do all UK companies have to end in the word I limited?
For most companies having limited or ltd at the end of their name is a mandatory requirement. The only exception to this rule is when registering a company limited by guarantee, which permits a section 30 application to incorporate a business without the suffix.

11. What is the difference between a company limited by shares and another limited by guarantee?
The main distinction between the toe types lies within the kinds of activities which they typically undertake. Companies limited by shares are usually profit orientated businesses and thus have commercial based memorandum and articles of association applied in their company formation submissions.

Companies limited by guarantee are often non-profit making organisations such as charities, associations and clubs. As such their constitutions are geared towards these goals.

12. Where could a partnership agreement be obtained from?
Partnership agreements are sometimes available form business forms specialists and can be downloaded online after paying the required fee. Alternative a solicitor with experience in commercial partnerships would be able to draw up the required documents and make any alterations to suit the individual start-up business. The UK Law Society provides information on Solicitors and their areas of specialism.

13. Some company formation agents charge more than others, why is this?
Similar to any product, some registration agents settle on different pricing structures. In certain cases the company formation services are identical whereas in others their might be additional features offered. The persons starting the business should assess these differences based on what they require and whether the increased sums are justified in their minds.

14. How often is VAT paid to Revenue and Customs?
The general rule is that VAT is remitted to Revenue and Customs on a quarterly basis. Therefore with four VAT quarters in a given financial year, the business would send payments to the tax authorities within one month after the end of each of these three monthly periods.

It is possible to subscribe to the annual VAT scheme in order to reduce the administrative burdens on the business, particularly when it is starting up. Under this VAT scheme, monthly estimated payments are made and a final reconciliation carried out at the end of the year and any difference paid or refunded.

A quarterly VAT scheme also exists and might be beneficial to business start-ups which anticipate having high levels of Vatable expenditure but no significant sales on which VAT would be charged. These organisations would then receive their refunds from Revenue and Customs on a monthly basis instead of quarterly and thus have an improve cashflow position.

There would of course be the extra accounting duties relating to submitting twelve VAT returns instead of four.

15. How many persons are required incorporate a UK limited company?
One person can assume the positions of both company director and corporate shareholders. Secretaries are no longer a legal requirement when setting up a UK limited company and therefore two persons are not needed.

16. How many UK companies can one person hold?
There is no official limited to the number of company formations a single person can instigate and then hold. Indeed there are numerous company set-up agents who have incorporated and then hold hundreds a limited companies for future use or resale.

17. What is the main difference between a ready made company and one which is registered as new?
The significant difference is the time in which each has been in existence. Obviously with a new company incorporation as a corporate entity has just stared. Ready made companies on the other hand could have existed for days, weeks, months or even years.

18. Who is available to discuss starting a new business with?
It is generally advised (subject to confidentiality) to talk about plans for starting a business with as many people as possible. Friends, relatives and colleagues are a good source of informal opinions, where as an Accountant would be able to assess both personal and commercial taxation implications and provide information on the start-up options.

Simply talking about business ideas can often provide a self critique of the proposal and identify areas of the plan which should be researched and looked at in greater detail.

19. Is possible to start a business and be employed at the same time?
It is perfectly permissibly (subject to any restraint of trade clauses) to effectively have two jobs at once, the first for an employer and the second operating as either a sole trader, a partnership or as a limited company.

A great many people who work but have an intension to set-up a business have them both running in parallel so that the self-employed aspect can be established before they depart with the income from their employment.

20. Can a business be set-up and the identity of the owners kept secret?
Setting up as a sole trader or partnership permits this to a greater extent compared to that of registering a limited company. There is no official registry which contains a global list of UK unincorporated businesses, whereas Companies House provides information and details of all corporate entities in England, Wales and Scotland.

From October 2008, UK companies must have at least one person (as opposed to a corporation) acting a director of the business.

21. Are business premises mandatory for new businesses?
Subject to any rental, lease or mortgage agreement there is nothing to prevent a business operating from a residential property, for example, the owner’s home. This can offer a cheap means of getting started and as growth in the operations happens, commercial premises can be sourced.