My business partner, Ben, just wrote an article in which he pointed out you don't have to have a great idea to get started. He is right but that doesn't mean all ideas are worthy of a business.
I was 18 when I first registered a business. 6 months later I was onto my second. But then that was not really a suprise to me, I had read Richard Branson's book and his quote prepared me:
My attitude has always been, if you fall flat on your face, at least you're moving forward. All you have to do is get back up and try again. - Richard Branson
Second time around we came up with this idea to sell access to London's most expensive nightclubs to under-age drinkers on the club's night off. Element Teenage Events was born. It went pretty well looking back, we got over 30,000 people across socials in just over 6 weeks.
I had worked for few clothes shops before that so technically I have had a job. But since starting Thomson and Lambert (expertly named after ourselves) I have not had a normal job since. I still keep next to my desk now the same motivational pictures I put up back then to remind me of how far naive determination can take you.
Truly stunning branding here too:
I have launched some excellent ideas and some terrible ideas, faced scary periods of not knowing if we would make through and enjoyed some really special moments of breakthrough and success. I am not honestly sure exactly how many registered Ltd companies I have owned now but its enough, enough to have made some mistakes on your behalf and hopefully to give you some useful tips now.
My first piece of advice for setting up a company: don't do it yet.
This may sound contrary but hear me out. Once you have a company you will find a few things happen:
In short, its a bunch of administrative hassle and distraction. I rushed into opening my first company but it was MONTHS before I remotely needed it for anything. If protecting a name is in some-way critical to the value of the company then of course registering makes more sense but otherwise just get on building.
While you are starting out just keep a record of what you spend on the company because you will be able to offset those costs:
Section 61 of the Corporation tax act states that pre-formation expenses are taken as expenses that were incurred on the first day of incorporation. This extend back up to seven years before the incorporation of a company so you have plenty of time!
When the time comes and you need to get the legal entity set up then I find the metaphor of a child is useful.
When you have a child that person, like all of us, has only two things that are certain in life 'death and taxes'. With this in mind we produce a Birth Certificate and later enrol them for Tax. Also like a child, a Ltd company is its own legal entity but still your problem. The money in a company bank account is NOT YOURS but when it gets in trouble with the headmaster it is your problem.
This is something that is really important to understand. When you set up a company you create an entity capable of owning things, making money, being taxed and so on, all in its own right. You have not created a way to make you money, for that see self employed. Once the company has paid its taxes and all other liabilities it can then give you money (wohoo) but in a controlled way and with tax implications of its own. I don't want this to put you off, of course owning a company is a fantastic feeling and offers lots of amazing opportunities but never the less we need to understand what is being created.
But back to death and taxes. The practical act of setting up a Ltd company involves two primary tasks:
1. Register a company with Companies House which controls all Ltd companies in the UK (the providers of your birth and death certificate)
2. Complete registration with HMRC, who will be delighted to hear you are set up and will be looking forward to knowing when you will start sending them lots of tax.
There is plenty of other administration of course but these two are of PARAMOUNT importance. Do not let them slip the hassle and punishment for doing so is endless. For example I once submitted a simple confirmation statement late for my company. It was a simple and genuine administrative oversight, it ruined the company credit rating for over a year.
The process is really very straightforward, lots of companies exist (and have excellent SEO and paid ads to feature well on google) telling you to register through them. In reality that is jus a great way to spend a lot of money pointlessly. Companies house only charge £12 to register a business and you will only need basic information to do so. They also have a really good guide on their site taking you through it all so check out the link here to find out exactly what you need to get started.
Power of Patrick: Tips and tricks for getting shit done.
POP: Write it all down, you rarely login to these portals and the exact security question you choose is easy to forget, make a note somewhere secure and save yourself loads of hassle later.
I am going to pick up a couple of key points that I remember worrying me though:
Don't worry too much about the name. Do a search on Companies House to check if the name exists and bear in mind a few restrictions like you can't call it any name that would imply you belong to a protected body. But if the name you want is taken don't stress. You can still trade under your brand name, if it is not restricted in your sector, one of my current companies TrueGroup, is a trading name of Walktrue Ltd as an example.
To get set up I always just create 100 shares at £1 each. Why? It is enough shares to split with a business partner but simple enough for easy maths, nothing more to it really. Yes issuing shares is a procedure but its easy to do later so if you take investment or want to sell shares you can always make the amendments then. By that stage hopefully there is some income to get a professional to guide you through some of the nuances around share types so don't spend ages worrying at this point, you're so close!
NOTE: When you register those 100 shares at £1 each you are obliged to pay for them. Assuming for example that you and a business partner are going to own 50% each, when you open the company bank account make sure you pop £50 each in there. So many people forget and technically therefore don't own their company shares!
If you are the only director then you are also the secretary, this is a slightly archaic term these days but it just infers some obligation to file confirmation statements and other notices about changes to the company. Again don't worry too much about it while getting started, it can be changed later if it causes an issue.
Later, when you are setting up websites and letterheads, legally you have to notify clients of the company number and registered office so this address will appear on certain documents. However, it does not need to be your actual office address. For thousands of companies this is their accountants address, it just needs to be the place that the government can safely send you letters and know you will have received that correspondence so you can act on it. Again this can be changed later so don't let this stop you.
Companies House will now tell HMRC about the business and at some point soon you will get a letter regarding completing the Tax registration and where to file it online. Again this is surprisingly straightforward, you will need the company number and a few other bits but don't be put off I promise it is easy. Just like above, make sure you write down the details you are giving it will make life a lot easier later.
During this process there was really only one point that worried me and that was choosing a Tax end of year. It turns out you can have any day you like, so what makes sense? Personally I go for one of two routes: First up, psychologically I like the idea of matching a calendar year, maybe its dyslexia but it just makes sense to me. Or route two which is now the case because I have professionals to help: my accountant likes to tie in the PAYE tax year 6th April to 5th April and VAT too so it all dovetails. In reality you can change your tax dates later so again don't let this be the thing that holds you back.
POP: Now get your calendar out and set some reminders! I so wish I had always done this it would have saved me so much effort. Simply pop a reminder in for yourself of the two key dates: 1. When you need to file your annual confirmation statement with companies house. 2. When your tax year ends and you need to file accounts with HMRC.
Now that you are set up, my final piece of advice: find an accountant and get yourself set up with some accounting software. It never ceases to amaze and frankly annoy me how much money we spend on software each month across my companies but there can be no doubt that a monthly payment to Xero for accounting and a direct debit to my accountant are some of the best money I spend. Between them it ensures we stay the right side of endless tax law and procedures. Expect to pay something around £1,000 a year for tax returns which will also cover you as director. I am sure you can find it for less and I know you can pay more but for that price you will find a quality firm who will look after you.
If you want to learn more about software and subscriptions we use then don't worry that article is coming soon and when written I will link to it here.
Where do we go from here? PAYE, VAT and plenty more but I will detail more of that in the next article. For now I hope this little overview is of help and if you want any support at all please reach out and I will do what I can: patrick@truegroup.agency
Patrick Lambert
#alwaysevolving
Entrepreneur, Presenter. Marketing, Web3, Cars, Property.
Currently working on uGen: Web3 social content platform
Ben Collins is a Creative Director 👑
Business Founder x 5 🚀
Loves nuts 🥜
Writes about entrepreneurship, marketing and the gym
My business partner, Ben, just wrote an article in which he pointed out you don't have to have a great idea to get started. He is right but that doesn't mean all ideas are worthy of a business.
I was 18 when I first registered a business. 6 months later I was onto my second. But then that was not really a suprise to me, I had read Richard Branson's book and his quote prepared me:
My attitude has always been, if you fall flat on your face, at least you're moving forward. All you have to do is get back up and try again. - Richard Branson
Second time around we came up with this idea to sell access to London's most expensive nightclubs to under-age drinkers on the club's night off. Element Teenage Events was born. It went pretty well looking back, we got over 30,000 people across socials in just over 6 weeks.
I had worked for few clothes shops before that so technically I have had a job. But since starting Thomson and Lambert (expertly named after ourselves) I have not had a normal job since. I still keep next to my desk now the same motivational pictures I put up back then to remind me of how far naive determination can take you.
Truly stunning branding here too:
I have launched some excellent ideas and some terrible ideas, faced scary periods of not knowing if we would make through and enjoyed some really special moments of breakthrough and success. I am not honestly sure exactly how many registered Ltd companies I have owned now but its enough, enough to have made some mistakes on your behalf and hopefully to give you some useful tips now.
My first piece of advice for setting up a company: don't do it yet.
This may sound contrary but hear me out. Once you have a company you will find a few things happen:
In short, its a bunch of administrative hassle and distraction. I rushed into opening my first company but it was MONTHS before I remotely needed it for anything. If protecting a name is in some-way critical to the value of the company then of course registering makes more sense but otherwise just get on building.
While you are starting out just keep a record of what you spend on the company because you will be able to offset those costs:
Section 61 of the Corporation tax act states that pre-formation expenses are taken as expenses that were incurred on the first day of incorporation. This extend back up to seven years before the incorporation of a company so you have plenty of time!
When the time comes and you need to get the legal entity set up then I find the metaphor of a child is useful.
When you have a child that person, like all of us, has only two things that are certain in life 'death and taxes'. With this in mind we produce a Birth Certificate and later enrol them for Tax. Also like a child, a Ltd company is its own legal entity but still your problem. The money in a company bank account is NOT YOURS but when it gets in trouble with the headmaster it is your problem.
This is something that is really important to understand. When you set up a company you create an entity capable of owning things, making money, being taxed and so on, all in its own right. You have not created a way to make you money, for that see self employed. Once the company has paid its taxes and all other liabilities it can then give you money (wohoo) but in a controlled way and with tax implications of its own. I don't want this to put you off, of course owning a company is a fantastic feeling and offers lots of amazing opportunities but never the less we need to understand what is being created.
But back to death and taxes. The practical act of setting up a Ltd company involves two primary tasks:
1. Register a company with Companies House which controls all Ltd companies in the UK (the providers of your birth and death certificate)
2. Complete registration with HMRC, who will be delighted to hear you are set up and will be looking forward to knowing when you will start sending them lots of tax.
There is plenty of other administration of course but these two are of PARAMOUNT importance. Do not let them slip the hassle and punishment for doing so is endless. For example I once submitted a simple confirmation statement late for my company. It was a simple and genuine administrative oversight, it ruined the company credit rating for over a year.
The process is really very straightforward, lots of companies exist (and have excellent SEO and paid ads to feature well on google) telling you to register through them. In reality that is jus a great way to spend a lot of money pointlessly. Companies house only charge £12 to register a business and you will only need basic information to do so. They also have a really good guide on their site taking you through it all so check out the link here to find out exactly what you need to get started.
Power of Patrick: Tips and tricks for getting shit done.
POP: Write it all down, you rarely login to these portals and the exact security question you choose is easy to forget, make a note somewhere secure and save yourself loads of hassle later.
I am going to pick up a couple of key points that I remember worrying me though:
Don't worry too much about the name. Do a search on Companies House to check if the name exists and bear in mind a few restrictions like you can't call it any name that would imply you belong to a protected body. But if the name you want is taken don't stress. You can still trade under your brand name, if it is not restricted in your sector, one of my current companies TrueGroup, is a trading name of Walktrue Ltd as an example.
To get set up I always just create 100 shares at £1 each. Why? It is enough shares to split with a business partner but simple enough for easy maths, nothing more to it really. Yes issuing shares is a procedure but its easy to do later so if you take investment or want to sell shares you can always make the amendments then. By that stage hopefully there is some income to get a professional to guide you through some of the nuances around share types so don't spend ages worrying at this point, you're so close!
NOTE: When you register those 100 shares at £1 each you are obliged to pay for them. Assuming for example that you and a business partner are going to own 50% each, when you open the company bank account make sure you pop £50 each in there. So many people forget and technically therefore don't own their company shares!
If you are the only director then you are also the secretary, this is a slightly archaic term these days but it just infers some obligation to file confirmation statements and other notices about changes to the company. Again don't worry too much about it while getting started, it can be changed later if it causes an issue.
Later, when you are setting up websites and letterheads, legally you have to notify clients of the company number and registered office so this address will appear on certain documents. However, it does not need to be your actual office address. For thousands of companies this is their accountants address, it just needs to be the place that the government can safely send you letters and know you will have received that correspondence so you can act on it. Again this can be changed later so don't let this stop you.
Companies House will now tell HMRC about the business and at some point soon you will get a letter regarding completing the Tax registration and where to file it online. Again this is surprisingly straightforward, you will need the company number and a few other bits but don't be put off I promise it is easy. Just like above, make sure you write down the details you are giving it will make life a lot easier later.
During this process there was really only one point that worried me and that was choosing a Tax end of year. It turns out you can have any day you like, so what makes sense? Personally I go for one of two routes: First up, psychologically I like the idea of matching a calendar year, maybe its dyslexia but it just makes sense to me. Or route two which is now the case because I have professionals to help: my accountant likes to tie in the PAYE tax year 6th April to 5th April and VAT too so it all dovetails. In reality you can change your tax dates later so again don't let this be the thing that holds you back.
POP: Now get your calendar out and set some reminders! I so wish I had always done this it would have saved me so much effort. Simply pop a reminder in for yourself of the two key dates: 1. When you need to file your annual confirmation statement with companies house. 2. When your tax year ends and you need to file accounts with HMRC.
Now that you are set up, my final piece of advice: find an accountant and get yourself set up with some accounting software. It never ceases to amaze and frankly annoy me how much money we spend on software each month across my companies but there can be no doubt that a monthly payment to Xero for accounting and a direct debit to my accountant are some of the best money I spend. Between them it ensures we stay the right side of endless tax law and procedures. Expect to pay something around £1,000 a year for tax returns which will also cover you as director. I am sure you can find it for less and I know you can pay more but for that price you will find a quality firm who will look after you.
If you want to learn more about software and subscriptions we use then don't worry that article is coming soon and when written I will link to it here.
Where do we go from here? PAYE, VAT and plenty more but I will detail more of that in the next article. For now I hope this little overview is of help and if you want any support at all please reach out and I will do what I can: patrick@truegroup.agency
