WHILE you might think that your business idea is uniquely brilliant and a guaranteed success, you may be in a minority of one. Testing your idea before you invest time and money can prevent future financial losses and failure.

A good business plan is important if you are looking for funding and support from your bank or external investors. It can also ensure that you focus on precisely what is needed to make your young business a success.

What structure should your business take?

A sole trader runs their business as an individual and can keep all the profits. They are completely responsible for their business and any losses that it may make. They must pay income tax, national insurance, register for VAT if necessary and complete a self-assessment tax return each year.

Directors in a limited company are responsible for running the company and shares in it can be owned by a number of people. It must be registered at Companies House, file statutory accounts, send HMRC a company tax return and register for VAT if required.

Limited partnerships and limited liability partnerships define the partner’s legal responsibility for any debts the company accrues. Profits are shared between partners who are responsible for paying tax on them. General partners in a limited partnership can be personally responsible for a company’s debts but limited partners are only liable for the amount they invested.

Before naming a business it is wise to check that there are no other businesses with the same name, the web domain is available and the name does not have a different meaning in other countries if you are planning to market and supply your products globally.

There are a number of business insurance options available to companies depending on the nature of the business. All of these insurances are designed to prevent companies closing should they have any claims made against them.

Managing cashflow effectively is dependent on the owner or directors planning ahead. Using technology automates the process but it is still advisable to get professional advice in order to maximise cashflow potential.

Get in touch with us to discuss your ideas in detail. Phone 01904 717260 or email Jill Campbell at jlc@jwpcreers.co.uk