Steps for launching a business

Following on from my prior article, I can share that I decided to go down the route of setting up my own business and becoming an independent consultant. A month in and I feel like it is the right time to capture all the steps that you need to incorporate a business. I personally feel like I’ve muddled through. There is no easy ‘how to’ guide to reference, like I’m used to from previous corporate roles. Instead, I’ve been asking people questions and piecing it together for myself. For anyone wanting to follow in my footsteps and found their own business, I thought it would be worth capturing the actions I took.

1. Determine whether you want to be a limited business or sole trader: One of the initial steps is to determine whether you even want to set up a limited business or to work as a sole trader. Typically a sole trader is personally liable for any debts related to the business. They pay income tax on their business profits. In comparison a limited company is a separate entity, distinct from the individual running it. The company pays corporation tax on its profits. Which route you take depends on your individual circumstances and preferences, as well as the administrative burden you are willing to take on. Advice I received was that if you are likely to have an annual revenue greater than ￡50-60k then there are benefits to going down the limited company route.
2. Give your business a name: If you’ve decided to pursue the limited company route then you need to register yourself with Companies House and HMRC.?To register with Companies House your business needs to have a unique name that has not already been taken by another business. Thankfully Companies House has an easy tool that quickly lets you know what already exists. It turned out that some of my first ideas had already been taken. This sent me back to the drawing board. Thanks to a baby-free brainstorming session with my partner I landed on Mack Clarity. Notably it contains my surname, which is part of my identity and brand, and secondly I’ve regularly been given feedback that one of my strengths is bringing clarity. So bringing the two together felt a nice touch, particularly as my tagline has become about me ‘enabling leaders to bring clarity so that their teams can thrive’.
3. Find an accountant: A wise Ben Legg, Co-founder and CEO of The Portfolio Collective, shared that it’s worth outsourcing those activities which do not play to your strengths and which will take you away from fee earning work. Recognising that accounting is not a personal strength, I knew that I would need to engage someone to help me. I also knew that I wanted an accountant local to the borough where I live. After a google search I discovered five accountants and set up calls with them. Through the course of these calls I was able to get a sense of working styles and what would chime with me, as well as their respective fees. What set my eventual accountant apart from the others was how she provoked me to consider things which had not come up in any of the other calls. Namely, did I want to go down the sole trader or the limited company route. I appreciated this provocation and how she’d helped question some of my assumptions.
4. Open a business bank account: Once you are registered with Companies House you receive your Certificate of Incorporation. You’ll need this to open a business bank account. I always knew I wanted to go with a challenger bank. Typically the traditional banks charge you a standing monthly fee, whilst the challenger banks don’t, plus the newer banks often have a funkier interface (it’s the small things right?!). I selected Starling, mainly because I already use Monzo (also highly rated for business accounts) for my personal finances, and wanted to keep personal and business separate with different apps and branding, so that mentally and visually I could tell them apart. I like the ‘pots’ feature on Monzo, known as ‘spaces’ on Starling, where you can put money aside to pay for future bills. This was another handy recommendation from my accountant who said to put away about quarter of what I earn to cover future corporation tax and National Insurance bills
5. Create a website and get a business email account: With an official business name it also means you can purchase a domain name to get yourself a website. In parallel this enables you to have a professional email address reflecting your business name. I’d been using my personal email account up until then, and my inbox was getting messy with my work emails getting lost amongst my personal emails.?On top I’m not sure my hotmail address was projecting quite the right image. I know, I know, I don’t have a gmail address, but I never saw the benefit to move platforms when it was all the rage to do so. I blame inertia.
6. Buy appropriate insurances: There are three potential insurances you need to consider: Professional indemnity protects you against claims for loss or damage resulting from advice you give to a client. This one is a must for someone in my situation where I’ll be giving advice to my clients; Public liability covers you for third party injury and property damage claims. Again a good one for me as I’m required on client site and don’t want to be on the hook for any inadvertent damage I may cause; Employer’s liability is essential for any business that employs people and it covers injury or illness claims of employees. Given I’m currently a one-woman band I don’t require this.
7. Develop your own T&Cs: This one has been the murkiest area for me. I’m conscious that I need some form of T&Cs as a way of laying down the expectations with any clients about the way I’d want them to engage with me. But it seems you can effectively write your own. I’ve not come across any examples of best practice that were strongly recommended. Instead it’s been a case of asking around my new communities and getting people to share their own ones to then create a ‘best of’ version that works for my business.

This is likely not an exhaustive list of all that you need to do, so do flag if I’ve missed something that I should have on my radar. I’m still learning. Equally please do your own research as to what you feel you should be doing to set up your own business. This article is merely a reflection of my own experience, but I wanted to capture my experience for the benefit of others. You got this!