Going it alone in 2020?
Have you made a career decision during lockdown to go it alone in 2020?
Perhaps you have had time to reflect whilst on furlough; unfortunately you have been made redundant; or perhaps you have continued to work either in the office or remotely but have decided it is time to follow your dream and establish your own business. Whatever your circumstances, you will undoubtedly have many questions.
Quite possibly the first and most important consideration is what type of entity or structure your business will take. The business structure that works best for you and your business will depend upon a number of factors.
A sole trader is a common choice for a new business; you are running the business as a self-employed individual. There is minimal set up with no incorporation at Companies House. The owner should however notify HMRC of the intention to run their business as a sole trader. The business owner shall retain all profits as income following payment of any taxes due and submission of Self Assessment Tax Returns. Despite the relatively easy set up, the risk element can be a concern for many however. As a sole trader, business owners are at personal risk of losses, debts and legal action.
A limited liability partnership (LLP) operates in a similar way to a traditional partnership arrangement. In an LLP, the liability of each member is limited to the amount invested. An LLP is incorporated through Companies House and there are annual filing requirements, including accounts. It is recommended that all members of an LLP enter into an LLP Agreement to cover their roles and responsibilities as well as other operational matters including the distribution of profits and losses.
A private company limited by shares is by far the most common business entity. As with LLPs and their members, the liability of each shareholder is limited to the amount that they have invested. A private company limited by shares requires to be incorporated through Companies House and there are also annual filing requirements. Such a company is owned by the shareholders but run by the directors and profits are distributed to the shareholders as dividends. Upon incorporation, the company will require to have a set of Articles of Association; the Model Articles or bespoke Articles. It is also recommended that a Shareholders Agreement is prepared for any company where there are two or more shareholders.
Each will have pros and cons for your business and a discussion with a solicitor and accountant may assist in determining the most appropriate entity for you and your business. Mackinnons are more than happy to discuss the legal issues with you and prepare any necessary incorporation or constitutional paperwork.
You may or may not be in a position to take on employees at the outset but when you are (or if you have any queries prior to doing so), Mackinnons would be happy to discuss this with you and prepare, for example, draft contracts of employment or grievance and disciplinary procedures to give clarity for both sides.
As a new start business you may be working from home or depending upon your type of business remotely, but you may already have an established business with employees and clients and your business may require commercial premises from which to operate.
If you choose to start a new business based at home you need to consider whether planning consent is required for your particular business use of your home.
Serviced office accommodation can be a great start-up option offering good value for an all-inclusive rate and tailored business support services such as reception and mail, use of meeting rooms, shared welfare facilities and the flexibility of a short term renewable duration.
The next step is your own commercial premises to purchase or lease and whether your requirement is for office, retail, commercial or industrial use, Mackinnons are on hand to review and advise you on serviced office contracts or to handle the purchase of premises or review and negotiate Lease terms on your behalf and advise you on all commercial property related issues.
Whatever your reason for going it alone in 2020; congratulations and we wish you every success with your new venture. Please do not hesitate to contact us if you have any business related queries. Please contact our Carden Place office on +1224 632464 and you will be directed to the appropriate department.