Starting a new business is complicated, and can be a minefield of financial decisions. Do you start as a sole trader or a limited company? Do you need business insurance? Should you hire an accountant? Many financial decisions require careful thought for avoiding the risk of financial penalties and mistakes. Making a wrong decision not only will cost you money now, but will continue to haunt you for a long time. To help you make the best start here are 3 questions you must ask yourself before launching a new business.
- Is It Best to Start as a Sole Trader?
- Do I Need an Accountant?
- How Much Do Accountants Cost?
If you do not expect a large income from the business, particularly at the start, it is a common belief that sole trader rather than limited company is the best route. But before you decide, consider how both entities affect your liability and your tax. If you are a sole trader in London then you have unlimited liability for all the debts of the business – there is no separation between you and the business. All your personal assets could be at risk if you are sued or you get into debt. If you do not want to risk this then you can register your company with Companies House, for a fee, as a limited liability company. When you do this the debts of the company belong to the company, and not to you. Tax issues are also affected if you are a limited liability company or a sole trader. If you are a new business then it is important to seek professional advice from an accountant as to what is best for you – if you are looking for accountants central London offers a range of professionals. The accountants central London provides can help you decide what your best direction is to take.
The basic questions to answer when you are thinking about hiring an accountant are: do I have the skill to do my accounts, and do I have the time? If the answer to both of these questions is no, an accountant is likely to be the best option for you. Tax returns are complex and they change every year. If you have no experience of doing your own taxes it helps to have a professional complete the task, at least until you can accrue more knowledge and confidence. You probably don’t want to be keeping up to date with all the laws and developments in the tax world, preferring instead to keep up with your own industry. When hiring a central London accountant you don’t need to worry about your tax knowledge. You can also relax, understanding that you will not run the risk of making mistakes in your tax returns that could cost you a lot of money.
Speaking of money, could an accountant save you money? Many accountants, even in London, are extremely affordable and the money you spend on an accountant will easily be recouped in terms of tax savings and time taken to do your own accounts.
