Here's the thing: when you start a business, it isn't simply a case of getting customers and making some money.
There are some steps you need to take to get your business off to a good start and make sure you're keeping it legal.
It was actually Terri who came up with the idea for this blog post, and it was an awesome suggestion! Thanks, Terri.
Decide what kind of entity your business will be
Do you want to be a sole trader, where you run your business as an individual and are self-employed, or do you want to register your business as a limited company and pay yourself a salary or dividends?
There are advantages and disadvantages to both options, with more detail in this post, but for most online businesses such as bloggers and freelancers, being a sole trader works well.
Register with HMRC
You'll need to tell HMRC that you're self-employed as soon as possible and file a tax return every year.
Register with any relevant bodies or organisations
Depending on your profession, you may need to register with a professional organisation or regulating body if you're carrying out work in that sector. If you are already a member of an organisation or body, you will probably need to make them aware that you have started trading.
If you process anyone's data, you will also need to register with the Information Commissioner's Office - there's a questionnaire you can complete here to find out whether you will need to register.
Open a business bank account
If you're a sole trader, you aren't legally obliged to open a business bank account, however, it's a good idea to have a separate bank account just for business transactions as this will make it much easier to track your income/expenses and complete your tax return.
Business bank accounts can be expensive, so if you're a sole trader it may be worth using a personal bank account (separate to the one you use for day-to-day transactions) for your business. Check with your bank before doing this, as some have restrictions on business transactions made through personal accounts.
If you run your business as a limited company or partnership, you must open a business bank account.
Prepare a new client onboarding process
When you take on a new client, you should have a set process for both yourself and the client to make the whole process flow smoothly. This could include:
- A proposal to agree on the services you will provide, timescales and your fees
- A welcome email or package detailing how you work and anything you need from them (e.g. proof of ID)
- A new client form to capture their information
- A draft contract of services for them to sign
- Logins to any relevant software or accounts
- An invoice for a deposit or upfront fee
- An update a month in to confirm your progress
The above is just an example of an onboarding process, but you can see the flow of events and how the client is welcomed aboard your services.
You can also see that most of the steps can be prepared for in advance so you have less work to do each time you take on a new client, for example, template emails, forms, contracts and invoices can simply be updated with your client's details.
Track your business income and expenses
Saved the best till last, haven't I?
As I mentioned earlier, you'll need to file a tax return every year. In order to work out the tax you need to pay, HMRC will need to know your total business turnover and expenses.
So you'll need to track all the money coming in and going out of your business to make sure you're paying the right tax.
There are other benefits to tracking your figures, though - you'll be able to analyse where you're spending money and if you can cut back, you'll see any patterns in income (if summer is usually quiet for business, for example) and prepare accordingly, and if you decide you want to apply for a loan or investment, you'll be well-prepared.
How did you prepare to start your business? Let me know in the comments!
I'm a financial coach and mentor helping female business owners to gain the knowledge and confidence they need to manage their finances successfully and have a positive relationship with money. If you're ready to take control of your finances, click below to find out how I can help you.
I also have a range of amazing resources which you can use to help improve your business finances.