Even if you just begin with a simple idea and maybe you have done some research and know that this idea is a real niche. Which ever the case, creating your own company could be the easy part but doing so could also give you the inspiration and enthusiasm that you need to go further.
In short, going self employed and being your own boss under the right conditions is as close to work freedom as you can get.
Although it is easy to set up and become the director of your new company, like most things in life we are faced with many options leading to more decisions on things that we need to know more about in order to just get it right.
What you are about to find below is as easy as i can make it and creating your own company is just the beginning to what can and should turn out to be a life changing prosperous future- your future!
Step 1. Find Your Niche
You most likely have this first step under your belt, and that is think of an idea , find your niche that’s going to make you money. Not sure about an idea yet? Look at what you are good at and what has already worked for others.
whether it’s trading goods or services (or even both) this idea will always involve a level of risk and investment.
Remember if you are not investing money you are still investing your time and in the world of business time is money.
So when you are thinking about creating your own company then these are some of the things that you need to weigh up.
Step 2. Creating Your Company Name
Think of a name that best fits your business but it can be very beneficial to make it less direct so that you are not limited to that one line of business.
For example A.F aerials might only supply and fit aerials where as A.F services can do far more.
But remember sometimes simple is better. Don’t go over super a complex name that involves all you can do and you extended family (hahah). Personally I used my own name and that worked really well.
Top tip> get plenty of feedback on selected names to help you with your final decision.
Step 3. Trade Without Your Own Company
Decide whether you want to be a small business under the term “sole trader” which in this case, there is no need to register a company as you are the “company” but you can still use a trade name.
To set up as a sole trader, you need to tell HMRC that you pay tax through Self Assessment. You’ll need to file a tax return every year. It’s a lot less scary then it sounds and learning how to do it, is quick, easy and will save you a few bobs.
OR if you want to create your own company then proceed. My suggestion thou is to double check what is right for you in term of tax efficiency. The scary bit: You will need a director and a secretary.
(the antidote) Top Tip> Although you can have more than one director and secretary, you can also be both the director and the secretary all in one. Meaning all the power belongs to one person avoiding any risk of company disputes.
Step 4. Understanding The Difference
Understanding sole trader vs limited vs company partnership
Let me explain…
A sole trader is an individual who owns and run a business entirely by himself. In a sole trader business the person owning the business and the company are the same legal entity… As there is NO difference between the company and its owner, it makes the owner (you) fully responsible for any debt contracted. Also anything bought by the company is really bought by you.
A partnership is a business entity comprised of two or more individuals. Sometimes partnerships are limited, meaning that one of the individuals is only investing in the business while the other individual is actually running the business.
In a limited company, the company is a separate legal entity to its owner(s) and therefore the owners’ liability is limited meaning that if the company has to file for bankruptcy then you shouldn’t loose your house. Anything bought by your company is NOT bought by you and therefore you don’t own it.
Step 5.Registering Your New Company
You can either pay an accountant around £50 to do it for you or do it yourself online with either a dedicated website or for the cheapest way you can do it yourself for a very small fee via company house which you can access through the .gov website. When you do this you will receive a share certificate naming you as the owner along with a unique company registration number.
If you do decide to use an online company registration, then be carful as you don’t get something for nothing
Did you know: you can not register a company with a name that already exists, where as if you are a soul trader you can.
So there you have it. Creating your own company is not that difficult. The best thing you can do with any company is treat it like a priceless plant that you will keep well watered and watch it grow into a tree and that involves a good clean reputation with a good credit score. Look after your company and your company will look after you. So remember when you are thinking about creating your own company, it’s like gaining a driving licence and then learning how to drive for real.