Full and comprehensive business plans are very important in raising finance and helping ensure the possible success of your business – there are many issues you need to consider...

Trading format

There are several possible legal entities, such as a limited company, a partnership or a sole trader. A business's legal identity will depend on many factors including taxation, the possible size of the business and the tax position of the prospective owners.

Budgeting

Many businesses fail to develop realistic plans and, as a result, significantly increase their risk of failure.

As a minimum, the plan should include:

• A forecast of sales and expenses
• Capital expenditure forecasts, e.g. cars, property, machinery, computers etc.
• Cash-flow forecasts
• Profit and loss forecasts.

These plans should be generated at various levels such as high, medium and low level of sales to see the impact on the finances.

VAT

If your sales are expected to exceed £67,000 per annum, you will probably have to register, with H.M. Revenue and Customs, and charge VAT on your sales. If your sales will be below this limit, you should consider voluntary registration.

Even when you have registered, there are a huge range of VAT issues that could affect your business. These include issues such as exporting, exempt supplies, the cash accounting scheme, capital goods scheme and pre-trading purchases, all of which we can advise on.

Taxation

Tax is a vital consideration when starting a new business. The timing and amount of any tax payments will have an impact on cash-flow, and this might influence the timing of the year-end accounts and trading format.

A big factor will be the timing and nature of any capital purchase such as cars, vans, machinery, computers etc. There are a range of allowances for these items but they will vary depending on the exact timing of the purchase and nature of the asset.

Employment

Taking on employees is a major factor for many start-up businesses. You must comply with the employment laws, and you need to set aside realistic costs and time to establish employment procedures. A new business will also need to set up a paye scheme in order to deduct tax, national insurance and related costs from employees. This complex area can be easily resolved for you by seeking our advice.

Realistic review of costs

Many new businesses fail to set realistic budgets for likely costs. It is far better to overestimate costs and assume they will have to be paid early than to plan for good news only. Likewise you should plan that all customers will pay you late, if they do pay early it is an added bonus. It is a lot easier to run a business with unexpected extra cash in the bank than have to approach the bank for an additional loan. We can assist you with raising finance from banks.

Many people starting up a business are so keen to start trading that they fail to plan properly. A few weeks spent preparing a detailed written business plan can prevent expensive failure a few months later.

If you need assistance in establishing your business, the team at NolanJames will be pleased to help you.