5 Simple Tips To Make Your Small Business Official
Starting your own business is an exciting time, but it can also be challenging and complicated.
Having a great idea is one thing. Even researching your target market and the viability of your product is easy for many entrepreneurs.
The hardest part is often the bit where you need to make the business official, and cross all the legal t’s and dot the i’s.
This step is incredibly important as it will set you up legally to start trading and give you real credibility in the eyes of the consumer.
If you’ve never done it before, making a small business official can seem daunting as there are a lot of legal elements to put in place.
This part of the process is also the least exciting, and you may need to hit the brakes for a moment while you read the fine print and make sure you’re signing the right forms.
So, before you go live with your website or send out invites to your launch event, make sure you have covered your bases legally.
Following these five tips will ensure your business is legal and official from the very beginning.
1 – Check The Availability Of Your Business Name
The name of your business is an essential element.
This is what your entire brand identity will revolve around.
It needs to tell customers who you are and what you do, without being complicated or overly wordy.
It should also be easy to pronounce and shouldn’t need to be explained to a customer.
It also shouldn’t be too similar to a competitor or other brand as you don’t want confusion over who’s who.
Plus, your chosen name needs to work well with your branding and be easily incorporated into a recognisable logo.
On top of all this, the name also needs to be legally available.
If another company (even one that has nothing to do with your industry) is using the name you want and has trademarked it, you could get into big trouble.
You could be opening yourself up to a trademark infringement lawsuit.
Start by doing a quick Google search for your desired company name and see what comes up.
If nothing, move onto a business name search tool (there are many free ones on the internet) to see if there is anything in your region.
Finally, do a trademark search to make entirely sure that your name – in any form – has not been taken already.
Once you’re happy that another entity hasn’t used your name, it’s a good idea to get in quickly and trademark the name for yourself.
Then you can go ahead and buy the URL for your website and get cracking creating your branded marketing material.
2 – Create A Legal Entity
Registering your business as a legal entity is the next step.
There are several different options here, and it’s crucial to pick the right one based on the structure you’re planning for your company.
A sole trader is the most basic option and is suitable for freelancers or those who run their operations entirely on their own.
Then, there are a few partnership agreements – general, limited and limited liability.
These are suitable for people who want to run a business together, or if you have investors who have become partners, but you are the one responsible for the day to day running.
The final option is to register as a company – private limited, public limited or unlimited.
In these options, the company is separate to the people who founded and run it.
The difference between private and public is whether or not shares in the company can be traded publicly.
If you are uncertain as to which option is the right one, it’s a good idea to get legal advice before you move forward.
Remember, if you wish to register as a company, you will need to fully comply with the company structure requirements in terms of appointing directors and shareholders.
3 – Get The Permits You Need
Not every type of business or every industry requires you to have permits or licences to operate.
However, you must know what you need and ensure that you have it before you open up and start operating.
For the most part, physical spaces like retail stores and restaurants will need permits to trade.
You will also need health and safety permits to ensure that you are not putting staff or customers at risk.
You may also need a specific type of insurance to cover your entity against damage or liabilities.
If you are moving products to or from another country, take the time to read up on the import and export licences that you may need.
Apply for any necessary permits in good time and do not operate without them.
You also need to have a policy in place to protect your customers if you collect their details for any reason.
With all the right permits in place, you can opt to advertise that your business is licensed and regulated if you think this will improve your standing and add value to your brand.
4 – Talk To A Tax Practitioner
Personal and business tax is quite different, and having an expert in the field on your side will be a significant source of assistance.
They will help you to understand the different implications that the various business types have when it comes to paying tax.
It’s a good idea to talk to your tax practitioner before you decide on which type of business you should register as.
The next step will then be to register for a tax number.
You will need to pay tax on all business profits, minus allowances in your region.
Limited companies will also need to register for and pay Corporation Tax.
There is also VAT that will need to be paid if you earn over the annual threshold for turnover.
The responsibility is on to you to keep accurate records of all your income and expenses.
This is often best done by hiring a bookkeeper or accountant to assist you.
This way, you don’t have to learn the ins and outs of the accounting world on top of launching a brand-new enterprise, and you can rest assured that a professional is taking care of your requirements in this department.
You never know when you might be audited after submitting your tax return, and it’s best to have everything in order at all times rather than try to scramble to get your book up to date when the auditors come knocking.
5 – Open A Business Bank Account
A separate business bank account isn’t strictly necessary for sole traders or partnership agreements.
However, they’re a must for all limited companies.
They’re also highly recommended for any other kind of entity because they help you to keep personal finances completely separate.
With a dedicated business bank account, you can accept payments made out to your business name.
It’s also much easier to keep track of your income and expenses as they are the only transactions coming through this account.
Even if you are a sole trader, going for the separate bank account will allow you to pay yourself a salary for personal use and use the account for all business expenses.
This will make sorting out your tax a lot simpler in the long run.
It will also give you legitimacy with customers as they will receive an invoice to pay a business rather than an individual.
This can impact how people see you professionally and improve their opinion of what you have to offer.
Having a business bank account will also make life easier if you need to apply for a loan or a line of credit for your company.
You won’t be relying on your credit rating or banking activities to impact on a suitable interest rate or overall loan amount.
Legally Sorted And Ready To Open
By the time you are ready to open up, you should have completed:
- A thorough business plan
- Any funding pitches you may have needed to make
- Proper research on your target market
- The creation of a full brand identity – including research on your company name
- Spoken to tax practitioners and business insiders on the best way to register your entity
- Ensured you have the legal permits or licences required
- Opened a business bank account and hired a professional bookkeeper or accountant
Once you have completed these steps and made sure that you understand their implications in full, your business will indeed be ready to open.
With all the official documents signed and sealed, you can confidently focus on getting off the ground and establishing yourself in the marketplace.