Work from home

Work from home

Work from home is the popular choice when starting out a new business. Working from home is incredibly convenient if you are running an internet business. Your home is the place you have already and all you need is to find some space to setup your office at home. There may be distractions, but there are lots of good reasons to work from home.

Save Paying Office Rent

The money you save by not renting an office can be invested instead in technology, marketing and other things that build your business.

Commuting

Travelling a few feet in the office each day can make a refreshing change after years of catching the early morning train, tube or driving to work. You can work long hours for shorter days.

Flexible Working Hours

If you are the creative type, or just like to work at odd times, working from home means you can go into the office whenever you want.

Childcare

Working from home makes childcare a lot easier. It is also easier to fit your work around school drop off and pick up time.

Coffee shops

Even those with an office frequently choose to meet clients in a mutually convenient coffee shop like Starbucks or Café nearby. Use coffee shops to meet people. Most cafes provide free wifi so you can take your laptop and work there in between meetings.

Domestics Crises

Life is littered with domestic crises. It can be useful to be at home working during the day, even if it is only to let the telephone engineer in to fix your BT phone box or your boiler.

Comfortable

You can create a work-like environment, you can dress down as far as you like if you have no meetings with customers on some days.

Interacting With People / Communication

You will undoubtedly have people who work with regularly or on a project basis. You can use live chat or conference calls such as Skype, Face Time or Video call to hold teleconferences.

Environment

If you like to listen to music no one will stop you. You can create your office environment the way you like.

Colds

You know when someone starts sneezing in an open plan office? Soon everyone is reaching for the tissues. Working from home can avoid all this.

Working from home gives you lots of freedom to do your own things but you must also have strong self motivation and self disciplined to build your business.

Types of limited company

Types of limited company

There are different types of limited company available for incorporation in the United Kingdom with Companies House.

Companies House will not advice you which type of company is suitable for your business they normally advice you to seek legal advice.

Private company limited by shares

This type of company has a share capital and the liability of each shareholder is limited to the amount (if any) unpaid on their shares in the event of winding up.

This type of company cannot offer its shares for sale to the general public.

This is a company with a share capital divided into shares which are issued to shareholders. The liability of shareholders on a winding up is limited to any amount unpaid on the shares.

Private company limited by guarantee

This type of company does not have a share capital and its members are guarantors rather than shareholders. The liability of its members is limited to the amount they agree to contribute in the event of the company being wound up.

Private unlimited company

This type of company may or may not have a share capital but there is no limit to the members’ liability because the members’ liability is unlimited, the company is subject to less disclosure requirements than other types of company.

Public limited company

This type of company has a share capital and limits the liability of each shareholder to the amount unpaid on their shares. A public limited company may offer its shares for sale to the general public and may also quoted on the stock exchange.

Community Interest Companies (CIC)

Community Interest Companies (CIC) can be incorporated as a private or a public limited company. The CIC is a type of limited company designed for people who want to conduct a business or other activity for community benefit and not purely for the benefits of the shareholders of the company.

Business plan

Business plan

Business plan for your business is required when you seek funding for your business from the banks or other financial institutions or potential investors. Your potential lenders would be interested to learn more about your business model and the product and services you offer.

Even if you do not require funding for your business. It is a good to have one and use it as your continuing business reference guide.

A business plan is an overview of your business life cycle from the beginning to its foreseeable future. The plan should be short, simple, specific to the points and realistic with factual information.

Writing your business plan can help you to put things into perspective and allow you to prioritize your work according business operations needs and it also can be used as a yardstick to measure the progress of your business. Generally, a good business plan should cover the following aspects.

Vision

Capture in a sentence what is it that makes your business exciting and utterly irresistible to customers, suppliers and, most importantly, to you.

Background

Describe how you came to conclude that this is the right business to be in right now. What are the circumstances that are coinciding to create your opportunity?

Goals

What are the specific short, medium and long-term goals and how would you measure your success?

People

Are you starting up your business alone? Or with business partners? Or get new staff? Whoever they are you must know how are these people perfect for the job?

Products/services

What are you going to sell and what are the main benefits of your potential customers would prefer to buy from you then your competitors? Anyone else selling the same products and services?

Competition

Who is already out there and how will you be different? The differences are crucially important – without knowing them you will not succeed.

Marketing

How are you going to communicate the benefits you offer to those you seek as customers? How will you measure the response and improve marketing effectiveness?

Funding

How will you pay for your business expenses? Using your own savings or getting a bank loan and if there are investors what can they expect in return?

Risk

Show that you’ve assessed the risks to your success and have them covered.

Exit plan

Your business, like anything else, has a natural Lifespan. You need to plan for your exit before you start. Will you sell? Give it to your kids? What?

Last but not least, writing business plan provide you with clear direction of how your business is going to be one day.

Company registration numbers

Company registration numbers

Company registration numbers are issued to every limited company incorporated by Companies House in the United Kingdom. Your company registration numbers are an unique number to your company. Your company registration numbers are also known as company incorporation numbers or company numbers. Your company registration numbers is an official identification number for your company.

Format of company registration numbers

Company with registered office inCompany incorporation numbers format
England and Wales 01234567
Scotland SC123456
Northern Ireland NI123456

Limited company with registered office address in England or Wales shall have 8 digits numbers starting with zero as its company incorporation number. For example, Fine Arts and Pictures Limited has a company registration number 08409295.

Limited company with registered office address in Scotland has slightly different company registration number format to that of companies registered in England and Wales. The company registration number shall start with SC followed by 6 digits numbers. SC is the abbreviation of Scotland. Scotland Company shall have company incorporation number read SC123456.

Limited company with registered office address in Belfast Northern Ireland shall have a company incorporation numbers starting with NI followed by 6 digits numbers. NI is the abbreviation of Northern Ireland. Northern Ireland Company shall have company incorporation number read NI123456.

Where to find my company registration numbers

Companies House website

Type in your company name in the company name search box of Companies House website as indicated and leave the company number search box blank and click Search.

Company incorporation certificate

Your company registration numbers is printed prominently on the certificate under your company names.

Company change of name certificate

If you have recently changed your company names, Companies House would have issued you with your company change of name certificate and your company registration numbers are printed clearly on the certificate. Take note that changing your company names would not change your original company registration numbers.

All letters from Companies House

All Companies House letters sent to your company’s registered office address would have your company registration numbers printed and used as reference.

The incorporation emails

Your company formation accountants may include your company registration numbers in the incorporation emails presenting you with the Memorandum and Articles of Association and the certificate of incorporation.

When do you require your company registration numbers

You would require to provide your company registration numbers in the following events.

  1. Opening a business bank account.
  2. Submit the form 64-8 authorizing your accountants
  3. Submit your CT41G form disclosing your trading status with HMRC.
  4. Register for value added tax (VAT)
  5. Registering for Pay As You Earn (PAYE) with HM Revenue and Customs when you start hiring staff or paying director.
  6. Submitting your company confirmation statement.
  7. Preparing your company accounts.
  8. Completing your corporation tax return.
  9. Making changes to your company details with Companies House through web filing services or printed paper forms.
  10. Display on your company website.
  11. Print on your company letterhead and stationery.

Trading certificate

Trading certificate

A Public Limited Company (PLC) must apply for a Trading certificate before starting business.

Apply a trading certificate for your PLC

Your PLC must satisfy the authorized minimum share capital requirement which the nominal value of your PLC’s allotted share capital must be at least £50,000 or €65,600. Your PLC cannot satisfy the share capital requirement by a combination of euro and sterling shares or by shares in any other currency.

Your PLC must deliver the Companies House form SH50 to Companies House with the following information.

  • State whether your authorised minimum share capital requirement will be satisfied in sterling or in euros.
  • Specify the amount, or estimated amount, of your company’s preliminary expenses
  • Specify any amount or benefit paid or given, or intended to be paid or given, to any promoter of your company, and the consideration for the payment or benefit, and
  • Be accompanied by a statement of the aggregate amount paid up on the shares of your company on account of their nominal value.
  • Be accompanied by a statement of compliance. The statement of compliance is a statement that your company meets the requirements for the issue of a certificate under section 761 of the Companies Act 2006. The registrar may accept the statement of compliance as sufficient evidence of the matters stated in it.

Exemption from a trading certificate

Your PLC is not required to apply for a trading certificate, if your company is upgrading its status from a private limited company to public limited company status.

However, when re-registering your private limited company to a public limited company, the nominal value of your PLC’s allotted share capital must be at least meet the authorised minimum share capital requirement and the authorised minimum share capital requirement must be satisfied either entirely in sterling shares or entirely in euro shares.

Seal a deal or borrow money

In the event your PLC do business or exercises any borrowing powers in contravention of section 761 of the Companies Act 2006, an offence is committed by your company, and every officer of your company who is in default.

Conviction and fine

A person guilty of an offence under section 767 subsection (1) of the Companies Act 2006 is liable:

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

The transaction still valid

A contravention of section 761 does not affect the validity of a transaction entered into by your company, but if your company

(a) enters into a transaction in contravention of that section, and

(b) fails to comply with its obligations in connection with the transaction within 21 days from being called on to do so, the directors of your company are jointly and severally liable to indemnify any other party to the transaction in respect of any loss or damage suffered by him by reason of your company’s failure to comply with its obligations.

Who is liable?

The directors who are so liable are those who were directors at the time your company entered into the transaction.

Public Limited Company obligations

Public Limited Company obligations

Public limited company (PLC) obligations continue after admission to Stock Exchange. Your PLC must continue to comply with the listing rules set by United Kingdom Listing Authority under Chapter 9 of the Listing Rules.

Your public limited company obligations include:

  • To avoid a false market in your company’s shares
  • To give notice of the date of a board meeting at which your directors will decide on payment of dividends and their decision;
  • To announce preliminary profits and losses for the year once your board of directors has given approval for the figures,
  • To publish information about certain acquisitions and realisations of assets including the purchase by your company of its own shares;
  • To comply with the detailed provisions of The Listing Rules as to the content of your company’s annual report and accounts which includes your obligation to prepare half yearly company accounts and
  • To give details of any changes in the board of directors, as well as adopting rules on dealings by your directors in your company’s shares which contained in the Model Code on directors’ dealings as spell out in The Listing Rule 9. The code prevents directors from abusing their position and insiders dealing.

Employee rights

Employee rights

Employee has the rights, whether full time or part time working for your business entitled to the following in accordance to the Employment Law.

  • Be paid at least the national minimum wage.
  • Work no longer than the maximum weekly working hours with breaks.
  • Entitle to equal pay for equal work
  • Entitle to minimum of four weeks paid holiday
  • Protection from discrimination
  • A safe working environment
  • Notice of termination of their employment ( after one month)
  • Be given a written statement of particulars of employment within the first eight weeks
  • Entitle to statutory sick pay and statutory maternity, paternity and adoption pay
  • Maternity, paternity and adoption leave
  • Parental leave and time off for family emergencies
  • Request flexible working arrangements
  • Protection from unfair dismissal (minimum one year of employment)
  • Redundancy pay with minimum of two years employment

You may contact ACAS (Advisory, Conciliation and Arbitration Service) if you require more information about employment law. ACAS provides free and impartial information and advice on employer’s and employee’s rights on all aspects of workplace relations and under the employment law.

It is certainly worth paying attention on employment law particularly if you have employees or intend to hire one. The benefits of getting on the right side of the law are worth the effort and for the good of your business. This will not only to avoid financial penalties but also to eliminate unwelcome publicity for your business because unfairly treated employees can make a claim against you at Employment Tribunals or under Civil law normally for compensation.

Employee National Insurance (NIC)

Employee National Insurance (NIC)

Employee’s national insurance is payable by your staff and it is your company’s responsibility as the employer to deduct your employee’s national insurance contribution from your staff salaries and pay them over to HM Revenue and Customs.

If you hire a staff under employment contract, your staff is required to pay Class 1 employee’s national insurance contribution. For people working for your business as a freelancer or independent consultant, in other words, they are not under your employment contract terms, and you pay them when they invoice your business, in that case you are not require to put these people in your payroll thus no need to deduct any employee national insurance off their payments.

The UK national insurance contribution is administered by National Insurance Contributions Office (NICO).

National Insurance Number

Your staff must provide you, as their employer, with his/her national insurance number, if your staff does not have a national insurance number he/she should apply to their local Jobcentre Plus Office for one.

If your employee has a national insurance number but it has been lost then the person should contact HMRC.

National Insurance Contribution (NIC) Rates

HM Revenue and Customs published national insurance contribution rates and thresholds on the gov.uk website.

Other Deductions

Employers are also required to deduct income tax from your staff salaries
under the Pay As You Earn (PAYE) Scheme and pay it over to HMRC together with the employee’s and employer’s national insurance contributions.

Outsource payroll processing to your accountants

Working out income tax and national insurance contributions can be burdensome and time consuming process with the pension contribution as well. It is normally more efficient to ask your accountants to handle your payroll processing and you focus on your business.

Recover debts from your customers

Recover debts from your customers

Recover debts from your customers as quickly as possible is important. This is because in your business, your your main income is from yours customers, but the income will only materializes into cash when they actually pay up! Until the customer pays, you are financing their needs.

Credit check

Your business is better off to keep your bad debts and your level of accounts receivable (debtors) to a minimum by having a good credit control procedures in place. It is recommended that your business always check the creditworthiness of your customers, either through a banker’s reference or by using an independent credit rating agency such as Noddle or Experian.

Customers with bad credit rating should be on cash on delivery terms. Your business should also monitor the time taken by your customers to pay you. The longer your customers take to pay, the higher chance that their debt will turn bad.

Early payment discounts or pay by installments

Encourage customers to pay sooner by offering early payment discounts or payment by installments.

Take legal actions

Do not be afraid of taking legal action to recover debts from your customers. Often, the threat of legal action against a financially unsound customer will make them pay up quickly as they do not want their other creditors to be aware of their financial situation because this may lead them stop supplying goods and services on credit.

Use aged debtors report to monitor

Most bookkeeping and accounting software comes with aged debtors reporting. This report is a simple report summarizing the amounts owed by customers and how old the debts were. You can see at a glance which customers are taking ages to pay.

An example of aged debtors report

If you are still using excel spreadsheet for your bookkeeping, and your customers base has expended steadily, consider to invest in online bookkeeping software like Clearbooks or Xero.

You could create your own aged debtors report using excel spreadsheet if your customers base is manageable by you and regular updating the report would not be a hassle and not taking considerable of your time.

CustomersTotalCurrent2 mtholder
LoveU Ltd£50K£30K£20K
Missed Ltd£300£300
Total£50.3K£30K£20K£300

Based on the above example, it may be wise to put in effort to get LoveU Limited to pay up the £20,000 sooner by offering discounts and stop giving credit until the sum has been paid up. Similarly for Missed Ltd, the debt of £300 may need to be written off as bad debts if it is not recoverable.

Manage cash within your business

Manage cash within your business

There are ways to find cash within your business and it is interest free. Cash is King in business during good times or during not so great economy period.

Cash is a very important resource. Plan your cash flow requirements carefully. Work out how much cash is needed to pay suppliers and business expenses each month.

Break even point

Look at whether the current sales receipts sufficient to cover your business outgoings. If your answer is no then you should consider preparing a break even analysis on your products and services to see the minimum sales you shall make each month to break even.

Sometime, It may be that you need to increase or decrease your selling price a little to achieve the volume of sales to meet your break even point. Other times, it may be that rescheduling more staff during peak times to serve your customers and reduce number of staff during non peak would do the trick.

Take care of your customer.

Offer your existing customers discounts and incentives to keep them happy. Retaining good customers are required effort and sincerity.

For new customers, carry out some creditworthiness check before granting generous credit terms and consider shorter credit terms or no credit at all.

There are many credit agencies out there like Experian, Credit Safe, Noddle and Equifax that you could use to perform credit check on your new customers before granting credit or give a loan.

This is to minimize the risk of your business unable to recover debt from your new customers. General rule of thumb is excellent credit rated customer has lower risk of unrecoverable debts.

Review your debtors

You must keep your customers ledger up to date in order to know the true figures owing from your customers. Make sure you call your customers to follow up on due and overdue payments and send reminders.

If there are signs of these customers facing cash flow problem, there are likely that these debts will turn bad and will eat up your profit or even give you a loss. To reduce these risks, offer installments plan and consider stop supplying in credit until their payments are up to date.

You may also consider charging interest on late payments. However, you must inform your customers of this clause existed in the sales contract. Also, on-going creditworthiness check is recommended.

Compare forecast versus actual trading result

It is always good to prepare a forecast for your business. Normally forecast is prepared on 12 months basis. Be realistic when preparing your forecast sales and expenditure. This forecast can serve as a performance target and also give you the overall picture of your business and tell you the safety margin.

Regular review of forecast versus actual trading results will help to highlight your business activities that require your attentions.

Keeping company accounts up-to date

It is important that you keep your accounting records up-to-date especially your cash in hands and your bank accounts. If you are using accounting software to maintain your company accounts this is even better for you as you can easily retrieve your profit and loss account and your balance sheet every month to see how your business is performing by press of a button.

Control your business expenditure

Think about possibility of terminating service contracts that do not offer competitive advantage to your business. Consider asking your existing suppliers for discounts or incentives or even downgrade the services to basics plan to save up if possible.

Review the currents overheads for possibility of cut down.

Dispose of idle business assets

Think about disposing some of the unused or idle business assets such as vans, office furniture and computers to get some cash.

Do not hold stock in the warehouse

There is little use of holding on to large stock in the warehouse with the view that selling the stock now does not make you a good profit. Doing this will only tie up your cash in stock and eventually you have to pay your suppliers whether or not your stock is sold. Consider selling the stock at discounted price to generate some cash and also reduce the need to write off the stock due to obsolete.

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