Key Steps to Get You Off to a Great Start

We’ve worked with dozens of startups in the hospitality industry, from pubs, bistros and B&Bs to hotels, restaurants and visitor attractions. In our experience, it’s vital to take some time out to

1. Decide what type of business entity is right for you

• Sole trader – you and your business are the same entity
• Partnership – similar to sole trader, but with more than one person
• Limited company (incorporated entity)

The sole trader and partnership options are ideal for most small and medium-sized hospitality businesses, because they are relatively easy to set up. It’s easy to maintain compliance with the authorities, and you’re much less constrained by statutory legislation than a limited company.

There are two main reasons why you might want to incorporate as a limited company:
• to limit your personal liability on company debt
• for tax efficiency

But be careful – there are many misconceptions here.

If you incorporate, your main creditors (usually the bank and the brewery) will insist that you sign a personal guarantee against money you owe them. This means these liabilities are removed from the limited company, and you are personally responsible for them.

Historically, there have been significant tax benefits to incorporation, once net turnover crosses a certain threshold. These savings have been mainly on class 4 National Insurance Contributions, rather than income tax.

The 2015 Finance Act has now closed this loop hole, and there’s little doubt that future finance legislation will erode this benefit further.

2. Register Your Business with the Authorities.

You’re legally required to do this within three months of the start of trade. If you don’t, you can incur costly penalties.

Sole traders need to register
• For VAT
• For machine gaming duty
• As self-employed
• As an employer.

Partnerships need additionally to register
• The partnership itself
• The partnership for VAT
• Each individual partner for self-assessment

Limited company directors need to register
• Themselves for self-assessment
• The company for corporation tax.

3. Prepare a Business Plan

Take time out to do this! It doesn’t have to be long or complicated, but is an invaluable reference tool once you start trading. A business plan should be like a living organism that keeps evolving to reflect your ongoing short, medium and long-term objectives.

Your plan should also include a basic set of profit and cash flow projections. If you need to borrow money, your bank or funder will insist on this. However, the real benefit is that it gives you targets for sales, gross margins and your expenses budget.

4. Set Up a Bookkeeping System

Decide how you’re going to record your bookkeeping. This doesn’t need to be complicated or technical, but it must comply with basic requirements. Put something in place before you start trading, because once you start to trade, you’ll have a million and one other things to think about.

Get your business off to the best possible start. Call us on 01620 826 060
Or email enquiries@thehayhoewebbpartnership.co.uk
for a confidential no obligations chat

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