Setting up their own business is the ultimate goal of many adult learners. In the following helpful article Avine McNally, Acting Director of the Small Firms Association (SFA), provides clear and detailed advice on starting your own company.
Many successful small businesses are in existence today. When they were being established however, often the person responsible did not have any great knowledge of the complexities of setting up a business such as the legal requirements or tax implications. Below are some key areas that need to be reviewed when establishing a business.
Business Strategy: One of the first areas that need to be addressed is the business strategy. Many people view strategy as being an issue for large businesses only, but knowing the purpose, vision, available resources, business positioning and values of a business are key to knowing which direction the business will take.
Legal Structures: Businesses can be established as a sole trader, partnership or as a limited company. The type of structure depends on the kind of business that the owner-manager will run, with whom they will be doing business, and their attitude to risk. It is advisable to get the professional advice when considering the structure for a business.
Sole trader: It is relatively simple to set up as a sole trader but if the business fails, the owner s personal assets could be used to pay creditors.
Partnership: This is where two or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor. The partners are jointly responsible for running the business and if it fails all partners are jointly responsible for the debt.
Limited company: If a business is set up as a limited company, it is a separate legal entity. If the company gets into debt, the creditors generally only have a claim on the assets of the company. The company must be registered with the Companies Registration Office (www. cro. ie), to which reports and accounts must be returned every year.
Business Plan: A business plan is the key document for any business as it records the research and decisions that have been taken during the planning stages for the business. It outlines the structure for the business from the start up stage and beyond. A business plan has two primary objectives:
Used by investors, banks and others to access the viability of a business.
Indicates the targets that must be achieved if the business is to be successful.
Taxation: One of the concerns people have when setting up a business is the various taxes and returns that need to be made to Revenue. From the outset it is essential that correct tax compliance structures are put in place. A tax advisor or the Revenue will provide information on making the tax system easier to understand and answer many of the basic questions people ask in relation to tax/VAT/PRSI.
While nobody likes paying tax, steps can be taken to eliminate and reduce some of the red tape associated with making returns and paying tax. Revenue On-Line Service (ROS) is Revenue s secure Interactive internet-based facility and is an effective way, to conduct business with Revenue.
Finance & Funding: Finance is a key part for any start up business. There are three main types of finance: equity (money contributed by the owners of the business), grants and loans. The only way to calculate how much finance and what type of finance is required for the business is by preparing financial projections. These consist of a projected profit and loss account; a projected cash flow; and a projected balance sheet.
If you are not familiar with accounting and financial matters, it s a good idea to involve an accountant to help in preparing financial projections.
Other areas that need to be considered are insurance, marketing, business premises and recruitment of employees (if necessary). Setting up a new business is extremely exciting, courageous, challenging, rewarding and a wonderful achievement when it becomes successful.
