You have taken the decision to start a new business in the UK and who would not want to think the business will tick all the right boxes and start making profit in every sense of the word. It is not a difficult thing to achieve but if you have done the right homework and have considered all the options in the UK.
Some of your business options in the UK are to start as a sole trader, as a partnership or as a limited company. One of the most common types of business model in the UK for small businesses such as accountants, tax return, etc. is called sole trader and it is also the easiest to set up and run.
For running your business as a sole trader, you will have to register with the HM Revenue & Customs as soon as you commence your business. In this business model, you and your business are one entity, and you receive all the profits from your business and you are the sole bearer of all the debts and any legal action that happens against your business in due course of time. If you think there is little risk of liability in your business, sole trader is your best option.
A partnership model is another one that is common for small businesses such as company houses, tax returns, tax agents, accountants, financial advisers, etc. In case of this model, two or more individuals co-own a business. There are more people to share debts, legal action and to add their expertise and assets to grow the business. But at the same time, any profit that the business makes also gets shared among all the co-owners. In this case too, the business and all the co-owners are the same entity and are responsible for everything related to the business.
The third type of business model is opening a limited company that is perhaps the most profitable business model in the UK. The process in opening a company involves more steps but that is where you reap maximum benefits out of this business model. A company is separate from its owners and so its debts, legalities, profits, etc. are all separate to its owner or co-owners. If your business fails, you are not financially liable for the performance of the company. However, when you think about the positives, if your business is on the rising path, this is the best business model to adopt in the UK.
What you get out of your limited company are financial and soft profits such as:
- it limits your financial liability in the company
- the business can still survive if one of the shareholders dies or if it is sold
- it brings in a lot of tax advantages as you can show all your inputs into the business
- it improves your credibility as a small business in the UK.
A few tips that will help keep your overheads low and generate more profit for your business are as follows:
Get on social media: Getting business visibility on social media is a great way to be in touch with your potential clients without investing too much into operations. Everyone is online and on social media today, so capturing the right customer online will drive your business and help it grow faster.
Cut costs: Realise areas in your business where you can minimise direct costs. Things such as talking with your suppliers about lower prices, analyzing systems and processes where wastage can be reduced, etc. can go a long way in cutting your operational costs.
Increase your turnover: there is nothing like increasing your turnover year by year by following a few steps. Always make it a point to retain your existing clients by offering them quality and timely service, keep your service catalog up to date and think creative about increasing your services, focus on your most profitable customers and continue reviewing your profit margins.
So now that you have all the right ingredients to different types of business models in the UK and how to climb the success ladder with your business, the wait is not over.