Chartered Management Accountants for the West Midlands, Shropshire and Worcestershire

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After Setting Up Your Business

Once you've set up there are a few other things to consider that might help you and your new business:

Banking

It is possible to operate your sole trading business from your personal bank account. You must, however, be able to distinguish your personal spending from that of your business for tax purposes.

You can also run separate bank accounts and major banks keen to get you on board for the future custom you may bring. Shop around till you find a bank that best suits your needs.

Insurance

Ensure your business will keep working even when you are not by insuring it. As a sole trader, unless you employ staff or make alternative arrangements, your business will come to a standstill if you fall ill, have an accident or go on holiday.

Shop around for health and medical insurance tailored to small businesses with self-employed owners. Check to see if subsidised insurance schemes are offered by your trade association or chamber of commerce.

Consider taking out disability insurance to cover you for time off through illness or injury. But check the qualifying period - some policies with lower premiums will not pay out until after an excess period of three months.

If you employ people you should have Employers Liability Insurance which will cover you if employees have accidents at work or cause injuries to others.

If you have your own premises then you should also take out Public Liability Insurance.

Pensions

Although putting aside money for the future may be hard for you right now, a pension plan is well worth considering. And not just for the financial security it will offer you in retirement - investing in a pension scheme can be tax-beneficial too. Everybody in the UK can get a basic state pension if they have built up a record of NICs for a quarter of their working life. But only those with a record of NICs for nine-tenths of their working lives are entitled to a full state pension, so self-employed people need to make further arrangements.

There are a number of pension schemes on the market designed for self-employed people. Many of these allow you to pay a lump sum, take a break from payments for a year or even make withdrawals.

Taking on staff

You might want to take on employees to help with your growing business. There are no restrictions on staff numbers but you will have to deduct PAYE tax from wages and pay it to the Inland Revenue each month. You will also need to make some summaries for employees and the Inland Revenue annually, as well as when a staff member leaves your employment.

An employer will be responsible for employees' Class 1 National Insurance contributions and your employer contributions. These are calculated as a percentage of an employee's wage.

You will also need to consider statutory sick pay, equal opportunities and health and safety conditions as well as employment terms and contract. And remember that if you have taken a business over you must uphold employees' existing terms of employment.

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