business owner in coffee shop

Starting a small business can be daunting, as there are so many things to consider that you may feel overwhelmed. From setting up a limited company to raising capital and learning to promote your business, starting a venture requires time and money – and a lot of research.

Starting a small business comes with unique challenges, which Gorilla Accounting fully understands because we were once a start-up too. We’re now in a position to support other SMEs and we’ve helped countless self-employed individuals over the years get to where they want to go. Take a look.

Perform Market Research

It can be tempting to get started as soon as you come up with an idea, but make sure to refine it first. Focus on why you want to set up a business; is it something that can service a gap in the market? Or will it help only a handful of people? Having an idea you’re passionate about is also important, so you should try to find the balance between what you love doing and what people want from you.

In addition, knowing the market you’re going to be operating in, whether it’s IT or property, is crucial when setting up your SME. After all, even if you have what you believe to be a great business idea, you must first be sure that there’s a demand for it.

Gaining a deeper understanding of the current state of your industry, knowing your competitors better, and learning all about your target audience can help you to get a competitive edge over other SMEs. Figure out what other businesses are doing better and how you can improve on already existing services – as well as what your USP (unique selling point) is.

This will also help you start a business with a lot more confidence since you’ll have the knowledge you need to make key decisions.

Think About How to Exit the Business

It may seem counterintuitive, but you may want to come up with a way to exit your small business when you create a plan. This makes you think about the future and helps you to understand where your SME is heading, how you can overcome hardships and how you can maintain growth.

No one likes to think their business is going to fail but being prepared to close a company doesn’t mean you expect the worst; it just means that you’re ready for all eventualities. Besides, having an exit strategy in place is useful if you plan on selling your business in the future as well.

Ensure Good Bookkeeping from the Start

When starting out, you may feel like you don’t have the need for comprehensive bookkeeping. You may have only a few clients on board or a small number of transactions and invoices to keep track of. However, being prepared from the get-go ensures that you’re not scrambling to find key receipts and expenses when tax season comes around – it also minimises the risk of mistakes.

A small business may be easier to manage from an accounting point of view when you’re just starting out, but this will quickly change as you continue to grow your venture. The last thing you want is to waste time trying to understand when to claim a certain expense or where to find your paperwork in the first place.

Keeping on top of your accounts from the start is easy with something like FreeAgent bookkeeping software, which organises everything so you’re never worried about submitting your self-assessment or your corporation tax return. This tool also allows you to get a detailed view of your accounts so you can make informed business decisions. On top of this, Making Tax Digital requires you to record all transactions digitally and report to HMRC regularly, so this should be kept in mind too.

Here are some bookkeeping tips for start-ups and SMEs:

  • Record every payment so you can go back to them if necessary.
  • Stay on top of all deadlines – having an accountant can help you to do this, so you don’t miss any important dates and don’t have to pay late fees or be penalised.
  • Track and claim expenses to save money.
  • Check your accounts at least once a month so you’re not caught by surprise by anything.
  • Understand when it’s time to hire an accountant – as you grow, you’ll have less time to spend on accounting, so hiring someone to help you will save you a lot of hassle, time and money.

small business owner working

Get Insurance

Another thing to know when you start a business is that you must have insurance in place. You may hesitate to purchase it if you’re unsure you need it, but the truth is that all businesses can benefit from being protected against third-party claims, natural disasters, theft, damages, etc.

The level of contractors’ insurance you need will depend on the work you do (and how risky it is), your location, the number of covers you have, whether you employ staff, if you deal with the public, and more. We’ve partnered with Kingsbridge to provide you the best insurance policies at great prices, so speak to us if you’d like to learn more about the coverage you should buy.

Policies like professional indemnity, public liability and employers’ liability are the most popular types of insurance, but you can also consider self-employed income protection and life insurance, among others. Your coverage will be tailored to your business, so you have adequate protection and are not paying for more than you need.

Figure Out the Essentials

Saving money and streamlining cash flow are important factors for everyone starting a business. For this reason, you’ll want to stick to the expenses you can’t avoid, such as rent, utility bills, work equipment, internet, stationery and insurance.

You’ll also want to focus on the essentials you need to run your business, which can include training courses and industry-specific software. When it comes to furnishings and machinery, you don’t want to compromise on quality, but you probably don’t want to spend too much money either, so it’s important to strike a balance between the two.

Obtain Funding

Capital is also necessary for most start-ups, so figure out how you’re going to fund your initial expenses and whether you have enough to keep going for the first few months. There are many different options to explore, such as applying for loans and having people interested in investing in your business.

Many people also opt for crowdfunding, which can help you to get off the ground by raising a little bit of money from several people. Platforms popular for this include Kickstarter, Patreon and GoFundMe.

First, you must calculate how much funding you need, then you may have to share your business plan if you’re considering a loan or an investment, so ensure that you have a solid business plan before you do anything else.

Choose the Right Location

If you must have a physical location, take some time to figure out when to best operate from. Whether office space or a store front, the right location is important because it can influence footfall, the price of your insurance, legal requirements, and more.

When considering a specific location, it’s important to keep certain factors in mind so you can make the best decision. This includes:

  • The costs of renting or buying property
  • Your target market and where your audience is
  • Where your partners are located and if your office is too far away
  • The safety of the area
  • Your personal preferences

In essence, look at what you need to run your business and scale it up, as this can help you to choose the right location for your requirements.

couple that owns small business

Pick a Good Bank Account

As a self-employed individual, you can benefit from your very own business bank account. Sole traders, for instance, don’t have to set up a business account because they’re not considered a distinct legal entity in regard to their business, but there are still many reasons to do it.

A key one is that you can stay organised and separate your personal transactions from your business’, useful when you have to submit your return and pay HMRC the taxes you owe. You also need to consider that many banks don’t let you use a personal account to conduct business.

Limited companies, on the other hand, don’t have the opportunity to opt out, since it’s mandatory to have a business bank account with this operating structure. Having a dedicated account for your venture means that you can more easily manage your cash flow, that you have fewer to no mistakes on your returns, that your business has credibility, and so on.

With a business bank account, you can receive payments, pay your own salary, pay income tax and National Insurance contributions for staff, claim expenses, pay your tax bills, pay your business expenses and pay VAT, just to mention a few of the transactions you’ll do as a sole trader or limited company owner.

And, while there are often costs associated with business banking, you don’t have to worry about going over budget when you’re just starting out. In fact, Gorilla Accounting understands that you want to save money wherever you can in order to give your business a fighting chance, which is why we’ve partnered with Mettle to give you a FREE business account you can trust.

Mettle is part of NatWest and lets you send and receive UK payments in no time. It also doesn’t take long to get an account, as you can apply in minutes. What’s more, if you have any questions, you also have a team to support you along the way.

Determine Your Business Structure

As a self-employed individual, you can opt to become a sole trader or a limited company owner, which have different pros and cons, depending on your business and turnover.

The simplest structure is sole trading, so it’s ideal for one-man-bands (such as independent contractors or graphic designers, for example) and people who want to dip their toes into self-employment. You’re entitled to all business profits when you’re a sole trader, but you’re also responsible for any potential debts, since you don’t have limited liability.

As a limited company, your company is a separate legal entity from yourself as an individual, so you’re not personally liable for any debts the company may incur. You have more responsibilities if you opt for this structure and also more admin, but this may also be the most tax-efficient solution for your business.

We’re both sole trader accountants and limited company accountants so, you can trust us to provide the best advice no matter where you are in your business journey. If you’re unsure which operating structure is right for you, don’t hesitate to talk to us and we’ll be happy to go through them with you – and to help you make the right choice.

small business owner in office

Gorilla Accounting’s SME Package

You don’t have to do it all when you’re setting up a business. With so many things to consider right off the bat, make sure you have one less worry by engaging the services of an accountant. And, as small business accountants, we understand that you’d rather focus on running your operations, on getting new gigs, on developing your skills and on advertising your services, instead of hunkering down to do your books or keep your accounts in order.

This is why Gorilla Accounting offers services specially designed to help small businesses flourish. We can provide you with a registered office address for only £10 + VAT a month and even self-assessment tax return services for £100 + VAT, ensuring all your returns are sent on time and have no mistakes, and helping you to pay your taxes by the deadline.

We can also help with the preparation and submission of corporation tax returns, VAT returns, payroll and self-assessment, with dividend and board minute documentation, with submission of R&D claims, with HMRC records checks, and more.

You get a dedicated accountant who will work closely with you from the start as well, meaning they will become familiar with your business and are then able to offer advice tailored to your particular requirements.

And, when you become a client, we’ll reply to your urgent queries on the same day if you contact us before 3pm, so you don’t have to worry or postpone a vital business decision while you wait to hear back from your accountant.

We’re on hand for more information, so please send us a message and we’ll give you a call back!