This book is about running your business through a limited company but first you must be clear about what you need to do. This initial chapter will help you decide this. It covers:

Starting In Business

So you’re going into business. You are going to become one of those entrepreneurs with a Rolls Royce and an expense account.

If only it were that easy. You have many decisions to take before you take the plunge into business.

Being In Business

If you are engaged in an occupation, work or trade, whether commercial, industrial or professional, which includes the buying and selling of services then you are in business. Note that there is no mention of the word profit. Of course you would not be in business if you were not going to make a profit but it is not compulsory, just advisable.

This book is not intended to help you set up a business. It assumes you already have a product or service that you wish to sell or trade in. This book is designed to help you administer the business you have set up.

Owning Your Business

Asking who owns your business may seem a silly question but there can easily be other people involved. Your spouse or partner or son or daughter may work in the business or some-one may have lent you some money to start it up. You must make sure that you know precisely the relationship any of these people have with you in your enterprise so that their interest can be properly taken into account.

Problems in business invariably arise through sloppy arrangements about money, so be advised to clarify these at the start.

Naming Your Business

There are a number of factors to take into account when deciding what to call your business. These are more fully discussed in Chapter 6, but you must choose a suitable name as this is what the public will refer to when talking about your business.

Defining Your Business

It is as well to define precisely what product or service your business is going to supply. Not only must you be able to inform your potential customers what you do but you must also be able to market and advertise your wares simply but succinctly. You must make it easy for your customer to deal with you.

Being A Sole Trader Or Going Into Partnership

Creating Your Set-Up

You have established that you have a business with a name and a product or service to sell. You know who the owner is. You must now consider the implications of this. You have to decide what legal form your business will take. You can be a:

• sole trader
• partnership.

Being A Sole Trader

The word sole in this context means alone or the one and only. In business terms a sole trader is where the proprietor is the sole owner of a business although he or she may have employees.

Being A Partnership

A partnership is defined by law in the Partnership Act 1890. It is the relationship which subsists between persons carrying on a business in common with a view to profit.

Put another way it is the relationship between people who have agreed to share the profits of a business carried on by all or any of them on behalf of all of them.

It might be advantageous to examine a little history. In the Middle Ages, when trading was growing fast, the individual traders found considerable advantage in combining with each other to carry on their business. The advantage was that it enabled them to command greater amounts of capital money they could not individually bring together and it helped them to combine and share their common experience and their profits. This was the beginning of partnerships.

Now if you have an arrangement to share the profits of your business with another person, the chances are that you are in partnership, sometimes known as a ‘firm’. This may be a close friend with whom you have a rapport and would work well or someone who may have put money into your business. There is now, under the Limited Liability Partnerships Act 2000 the opportunity to form a partnership with limited liability. It must be registered with the Registrar of Companies and two of the partners called ‘designated members’ must accept responsibility for sending information to Companies House. This form of partnership is treated for tax purposes like any other.