Rose Buckler, Head of Starling’s Business Banking Operations, shares tips on starting your own business.
Do you dream of setting up your own business? If the answer is yes, you probably have lots of questions. Here, I share my top tips on what you need to think about, right from the beginning when you have your business idea.
Keep business records
The sooner you start noting down costs related to your business, the better. You may be able to recoup some set-up costs down the line, such as mileage on your car to meetings, provided you can justify costs as business related.
Other business expenses could include using a room in your home as an office, or buying stationery or office equipment. It’s worth spending a few minutes each week to note down these expenses.
Sole trader or limited company?
The next big decision is whether to set up as a sole trader or limited company. There are pros and cons to each of the structures and it also depends on the size and nature of your business.
Some business owners only register as a limited company once their business profits reach a certain amount, a decision usually made due to tax efficiency (you could speak with your accountant if you’re unsure). Until then, solo entrepreneurs often operate as sole traders, the benefits of which are lower accountancy fees and fewer business responsibilities.
That said, sole traders are personally responsible if something goes wrong, meaning that your personal assets could be liable, for example if you haven’t taken out sufficient insurance for your trade and someone files a claim against you.
Protect yourself with contracts
Once you start trading, always set out the terms of a project or service in a contract. Make sure you include details of what will be delivered, the timeframe and clear payment terms. If you’re receiving a service from someone else, you should also ask for a contract and make sure you’re happy with it.
Many template contracts can be found online, including through the Federation of Self-Employed and Small Businesses (FSB) legal hub, where you can also connect to legal experts who can offer advice on the legal documentation needed.
It’s worth protecting yourself with insurance. Some clients will require proof of adequate insurance before entering into a contract and if you employ someone or have someone doing work experience, or subcontractors, you’ll need Employer’s Liability Insurance. You may also need public liability insurance and professional indemnity insurance. Explore our guide on the different types of business insurance.
Separate business and personal funds
To help avoid tax return issues, keep your business funds separate from your personal funds, for example with a business bank account.