Breakthrough Finance Ltd, London Small Business Accountants 	T: 0203 598 0335 M: 078 4306 4874

Planning Your Business

Most people starting a business would consider that finding an accountant to 'do' their tax would be the last thing to worry about. Actually it should be one of the first things to be done not the last.

For a business to really succeed it is critical that you appoint an accountant before doing anything else. Appointing the right accountant who understands the potential problems and who is able to guide you through the early planning stages is critical. It is important to be guided through the various stages of planning your business.

Your accountant will assist you with choosing the best structure for your business, help with preparation of a business plan, advising on bookkeeping methods and the most tax efficient set-up.

Even more important than those things however is simply the benefit of having someone to guide you through the start up process, answer your questions and to point you in the right direction to get the advice or funds that you need to start your business.

Many entrepreneurs think that a good accountant is always very expensive. This need not be the case. Breakthrough Finance Limited prides itself on being a low cost Accounting business ideally suited for small and start-up businesses.

Business Structure

The options are:
  • Sole Trader
  • Partnership
  • Limited Company

Sole Trader

Sole trader is where you trade in your own name or some other trading name. The business all belongs to you, the bank account is in your name and all the risks are yours. This is undoubtedly the cheapest form of business to start but one of the hardest to raise finance for and in addition you carry all the risk. This means that if the business is unable to pay its debts you are responsible for them, you cannot just walk away and forget them. Even your house is at risk in some circumstances. Also you will be liable to pay tax on all the profits even if that takes you into the 40% or higher tax brackets.


A partnership is when you are entering into the business with one or more other people A partnership is exactly the same as above except you are entering into the business with one or more other people. The risks are shared between you and the bank account is in the name of the partnership. This structure is a little more expensive as you will need a partnership agreement (a legal document setting out the regulations of the business between the partners).
However entering into a partnership with someone you do not know very well or cannot trust, could turn out to be a very expensive business indeed.

Your accountant's fees will also be higher as they have to prepare partnership accounts, partnership tax return as well as your normal self assessment tax return for each of the partners.

Partnerships have all the risks of being a sole trader but none of the benefits of a company so they are actually the least desirable option for any business structure and in most cases should not be considered as an option.

Limited Liability Company

Using a limited company limits your liability to the amount of capital you invest and can be the most tax effective way to trade. This is exactly what it says on the can. Your liability is limited to the amount of capital you invest - usually £100 for non capital-intensive businesses. A company is also far more tax effective for businesses who expect to generate profits in excess of the personal standard tax rate. Small companies pay tax at a fixed rate of currently 19%. Profits after tax can then be distributed free of tax to standard rate tax payers meaning shareholders in a company can much better manage their tax liabilities than sole traders. This makes companies one of the best business structures. However it comes at a cost. There is a small annual cost for maintaining your company plus your accountant's fees will be somewhat higher due to the extra work involved in filing company accounts and corporation tax returns in addition to your personal tax return.

Raising finance may be easier for a company.

Business Plan

You will need a business plan before any bank or third party investor will lend you any money. In addition to considering your business structure you may also need a business plan for the bank where you hope to open a business bank account and you will most certainly need a business plan before any bank or third party investor will lend you any money.

A business plan is a written document that describes the business, its objectives and proposed strategy as well as providing financial projections including budgets and capital requirements. It may also include a projected cash flow for at least the first year of the business. Your accountant will be able to assist you with the preparation of this document.

The business plan will have a brief section of the senior managers/directors of the business so having a good updated CV ready will be useful in preparing your plan. You will also need to address how you are going to finance your business and for most small start-ups this is the most difficult aspect.

Finally your accountant will ensure that you meet all compliance and regulatory issues and in today's environment of hefty penalties from both Company House and Her Majesty's Revenue & Customs(HMRC), this alone could save you a lot of money not to mention embarrassment.
Planning your business start up in London with affordable accountancy packages and help with your business plan from Breakthough Finance Limited, London Accountants, England, UK

Hopefully this brief article has demonstrated the importance of what it said right at the beginning: for a business to get off to a good start appointing your accountant early on can be critical so contact Breakthough Finance Limited today.

Breakthrough Finance Limited,
Registered Office: Suite F, 1 - 3 Canfield Place, London, England, NW6 3BT. Company Number: 04648676 Registered In England & Wales.
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