Post-recession leads to rise in start-ups

Lawpack on May 12, 2020

The end of the recession has led more people to go in search of advice for self-employment, as they express a desire to be their own boss.

This is according to Stuart Curtis, head of commercial business insurance at Lloyds TSB Insurance, who highlighted that the recession has led people to reconsider their career options.

He continued: “This new breed of entrepreneurs needs to ensure they’re not caught out when trying to cut costs, and that their property, stock and equipment are adequately covered.”

Mr Curtis emphasised that some businesspeople are not aware of the risks they are exposed to when starting up their own company, so therefore do not have the necessary cover in place.

A recent poll from Lloyds TSB Insurance showed that 5.9 million businesses across the country are home-based, with 27 per cent of them established over the past year.

 

Published on: June 6, 2011

Working from home ‘offers clear benefits’

Lawpack on May 12, 2020

People who seek advice for working from home will find there are a number of benefits from not going into the office during the week, an expert says.

Peter Thomson, director of research at the Telework Association, explained that people who work from home often find themselves financially better off.

With petrol prices and rail fares both on the rise, employees may find they are making significant savings, said the expert.

“If they don’t have to travel to work four days a week or they can stay at home one day and work from there or perhaps work compressed hours,” he explained.

Mr Thomson highlighted that employees may also find they are less stressed than if they were working in the office.

Working Families and Lancaster University Management School recently claimed that fathers who are able to work from home often enjoy healthier and happier lifestyles than those who commute to their place of employment.

  • Business News from Lawpack: Providing expert legal advice for employees working from home.

 

Published on: June 6, 2011

Fathers who work from home enjoy better health

Lawpack on May 12, 2020

Fathers who have sought advice for working from home are more likely to benefit from better health than those without flexible arrangements, new research has shown.

The Working for Fathers findings from Working Families and Lancaster University Management School determined that both physical and psychological health is better in men who work from home.

In addition, they were found to be less stressed and more committed to their employers than workers who permanently operate from an office.

Working Families chief executive Sarah Jackson emphasised that the more involved in family life that fathers are, the happier they generally tend to be.

“We welcome government proposals to increase parental leave for fathers and to extend the right to request flexible working to all employees,” she added.

Research from the Trades Union Congress recently found that homeworking stalled while the UK was in recession.

  • Business News from Lawpack: Providing expert legal advice for employees working from home.

 

Published on: May 31, 2011

Start-ups lack business advice to be successful

Lawpack on May 12, 2020

Almost a third of small firms have been tempted to cease operations in their early stages due to a lack of start-up business advice, it has emerged.

Findings from NatWest and Smarta.com show that many companies do not have the right tools at their disposal to manage themselves effectively.

During their first year of trading, 61 per cent said that cashflow was their major problem, while 40 per cent admitted to over-estimating their sales.

Dragons’ Den star Theo Paphitis commented: “Many small businesses lack the time and money to get essentials such as business plans, accountants or websites in place.”

He emphasised that the country now needs small businesses to thrive more than ever as it emerges from recession.

Research from Clydesdale and Yorkshire Banks recently found that 15 per cent of small firms struggle with understanding new regulations and legislation brought in by the government.

Published on: May 26, 2011

Home working ‘provides boost for businesses’

Lawpack on May 12, 2020

Employers could find that including flexible working provisions for employees can boost their business, new research has revealed.

Workers can actually be more productive by working at home, contrary to the commonly-held misconception, according to the poll by Dymo.

The survey found that office-based workers often end up wasting time by browsing online, doing personal admin and emailing friends.

Commenting on the findings, the Telework Association’s development director, Shirley Borrett, said that there were several knock-on benefits for the workplace, from allowing workers to be at home.

She said: “If an employee is trusted work at home, then they tend to have a good relationship with their manager and they value both that trust and the practical ability to fit work around their lives.”

In November, the Trades Union Congress reported that the rise of home working had helped reduce the average commuting time to its lowest in a decade.

It now takes homeworkers an average time of 47 minutes and 48 seconds per day, the trade body calculated.

Find out more on working from home with Lawpack’s Working From Home Starter Kit , written by Shirley Borrett, and Lawpack’s Working From Home Guide.

 

Published on: December 17, 2010

Entrepreneurs need business regulatory support

Lawpack on May 12, 2020

by Sarah Ashcroft

The UK business regulatory system needs to better reflect the growing need for entrepreneurship in the UK, it has been claimed.

Entrepreneurship is expected to become the focal point for “every facet” of economic and social life going forward, according to chief executive of the National Council for Graduate Entrepreneurship (NCGE), Ian Robertson.

The rules governing business partnerships and the legal forms for your business are among the areas that could be changed to make it easier for entrepreneurs to contribute to economic growth.

Mr Robertson added: “[That] entrepreneurs are said to be the engine room of the new economy provides a great deal of confidence.

“That alone is a stimulus. If you add in measures that benefit small to medium-sized enterprises and a lighter regulatory regime, you have all the ingredients for a successful entrepreneurial economy.”

Recent findings published in the 2010 Deloitte Entrepreneurship Survey indicated that over 90 per cent of the UK’s entrepreneurial businesses expect to grow their revenue in the next 12 months.

Over half expect to generate at least ten per cent revenue growth over the coming year.

  • Business Start-Up News from Lawpack: Solicitor-approved Business Partnership template with expert guidance on how to complete the legal form

 

Published on: January 13, 2011

Red tape holds back UK businesses

Lawpack on May 12, 2020

Two-thirds of small firms in Britain believe that their businesses are suffering because of red tape, a new survey has revealed.

The Institute of Chartered Accountants in England and Wales (ICAEW) has found that despite new initiatives to help reduce bureaucracy, there has been no change in the percentage of firms that feel negative about its impact on expansion, the Telegraph newspaper reported this week.

Around sixty per cent of owners said that employment tax was the biggest barrier for their business.

Concerns were also stated about tax changes, health and safety regulations and employment laws.

Robin Fieth, the executive director of the ICAEW, commented: “The regulatory tide is starting to recede for larger companies. However, there is a real risk that small and medium-sized enterprises could be left to drown.

“Government therefore needs to urgently start setting out how it will make the UK a friendlier place to do business.”

Posted by Christopher Evans

 

Published on: October 12, 2010

Minister gets work experience at small firms

Lawpack on May 12, 2020

A government minister is encouraging his civil servants to do work experience at small firms across the UK, in order to devise better policies.

Business and enterprise secretary Mark Prisk is currently working at a West Midlands furniture manufacturer, as part of the Week in Business Initiative run by his department.

He commented: “The manufacturing industry is vital to the recovery of the UK economy and the government needs to provide the right conditions to ensure manufacturing succeeds in the globally competitive environment.”

According to the government, small businesses account for 99 per cent of economic activity in the UK.

The coalition has this week highlighted a number of policies to help small firms continue to drive the economic recovery of the country.

It has been widely reported that details of a major new investment fund could soon be announced by the government.

The fund has already been associated with at least four major high street lenders, who are expected to pour more than £250 million into it.

Posted by Christopher Evans

 

Published on: October 7, 2010

New investment fund for small businesses?

Lawpack on May 12, 2020

A new investment fund for small businesses could be announced soon, according to widely-publicised reports.

At least four major high street banks will contribute to the fund, which could be worth up to £250 million.

The fund could be part of a report from the British Bankers Association, which it has said will be “comprehensive and will contain important and wide-ranging recommendations”.

It is expected to replace 3i, an investment fund established for small businesses in 1945.

The government’s banking task force was established three months ago to address funding problems faced by small businesses.

Earlier this week, the Scottish first minister Alex Salmond wrote an open letter to Vince Cable, which highlighted the situation faced by small businesses in Scotland.

Mr Salmond said that the current business environment made it necessary to “promote growth, investment and employment and not to take unnecessary risks with the recovery”.

Posted by Christopher Evans

 

Published on: October 6, 2010

Choosing the right business legal structure

Lawpack on May 12, 2020

When you start your own business there are a lot of decisions you need to make. But before you jump in, the first thing you need to do is choose the right legal structure for your business start up.

Choosing the right business legal structure is vital as it can affect the amount of financial risk you’re taking on, the amount of tax you have to pay, the control you have over your new business, and the administration you’ll need to do.

But do you form a limited company? Form a business partnership? Or act as a sole trader?

Here’s a brief guide to the different business legal structures you can choose for your business start up:

Business legal structure #1: Sole trader

Operating as a sole trader is the simplest form of business legal structure.

As a sole trader you are in charge of all aspects of your business start up. You’re personally liable for all debts of the business, even in excess of the amount invested. You and the business are considered the same entity.

Pros of a sole trader:

  • There is no requirement for you to file Accounts or Annual Returns or other information at Companies House, which means that you have greater privacy.
  • You are in complete control of the business.
  • You may pay less tax.

Cons of a sole trader:

  • Unlimited liability – you’re personally liable for any debts run up by your business start up, no matter how incurred, which means that your personal property can be used to settle business debts.
  • Potential difficulty in raising capital because you cannot transfer an interest in the business to investors as security for their investment.

Business legal structure #2: Business partnership

A business partnership involves two or more individuals carrying on a business together with a view to profit. Each business partner is personally liable for all debts of the partnership, including those incurred by the other partners.

So, when you’re forming a business partnership, it’s important to draw up a Business Partnership Agreement. A business partnership agreement gives a proper foundation to the business relationship and it outlines how any problems will be resolved, should the business get into trouble.

A business partnership agreement is also part of the evidence that you must give to HM Revenue & Customs to prove that the business partnership is in existence.

Pros of a business partnership:

  • There is a broader management base than a sole trader.
  • You may pay less tax, by avoiding double taxation, for example. This is where the company pays corporation tax on its profit, but later the shareholders effectively pay tax on the same profits through capital gains tax on the sale of their shares and income tax on their dividends.

Cons of a business partnership:

  • There is unlimited liability for all the business partners. The personal assets of each business partner are available to satisfy the debts of the business partnership.
  • Obtaining large sums of capital is relatively difficult as investment cannot be obtained from new shareholders.
  • Business decisions taken by just one partner bind all the business partners.
  • The business partnership may come to an end when existing business partners leave or die. If there are two business partners and one leaves or dies, the remaining business partner automatically becomes a sole trader, unless s/he admits another business partner.
  • It may not be easy to sell or transfer an individual business partnership interest.
  • Some tax incentives, such as employee share option schemes, are not available to business partnerships.

Business legal structure #3: Limited liability partnership (LLP)

The business legal structure of a limited liability partnership (LLP) is similar to an ordinary business partnership in that a number of individuals or limited companies share in the risks, costs, responsibilities and profits of the business.

But with a limited liability partnership the liability is limited to the amount of money the business partners have invested in the business and to any personal guarantees they have given to raise finance. This means that business partners have some protection if the business runs into trouble.

Pros of a limited liability partnership:

  • Limited liability partnerships retain the flexibility of a business partnership.
  • With a limited liability partnership, your personal liability is limited.

Cons of a limited liability partnership:

  • Limited liability partnership formation is more complex and costly than that of a business partnership.
  • Problems can occur when there are disagreements between the business partners.

Just like a business partnership, it’s important when forming a limited liability partnership to draw up a Limited Liability Partnership Agreement.

Business legal structure #4: Limited company

The benefits of forming a limited company are limited liability and raising capital easily. But the advantages of this business legal structure may not outweigh the disadvantages of higher costs, increased paperwork and greater regulation to which you will be subjected once you form a limited company.

Pros of limited company formation:

  • Limited liability. The shareholders are not personally liable for the debts of the limited company. The limited company can only ask shareholders to pay for their shares in full, if they haven’t already done so. The shareholder’s responsibility is limited to this amount and this amount is determined when the shareholder agrees to buy shares. Should your business start up fail, the creditors cannot obtain possession of shareholders’ assets, such as homes or cars, in settlement of debts. But the directors may find themselves liable to pay the limited company’s debts.
  • Capital can be raised with relative ease because investors can buy shares in the limited company. But this doesn’t mean that a new company can simply offer shares to the general public. Share offers are regulated by law.
  • Subject to the Articles of Association, shares can be transferred to existing members and to family members as gifts or otherwise. It’s possible to sell your shares in the limited company to other people, but not in a general offer to the public. Investors in a private company don’t receive the same protection as they would have if they were investing in companies listed on the Stock Exchange.
  • Since the limited company is an independent legal entity, it doesn’t cease to exist because one of the shareholders dies or retires. So it’s easier to ensure the continuity of a limited company than of a business partnership.

Cons of limited company formation:

  • The limited company must comply with statutory rules and disclose information to the public.
  • A limited company is usually the most expensive form of business to organise and run, although a business partnership can be equally expensive, especially a Liability Limited Partnership.
  • Both the limited company and the individual shareholders have to make tax returns.
  • Record keeping (such as keeping a minute book) can be more extensive for a limited company.
  • Winding up a limited company and, in many cases, even changing the business legal structure can be more complicated and expensive than for business partnerships and sole traders.
  • Any money in the company’s bank account belongs to the limited company and it can only be taken out as a dividend or wage, or set against money you put into the business.

For help and advice on forming up a limited company yourself, read our Limited Company Formation Kit, which provides all the guidance and company formation forms for you to use.

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Published on: October 11, 2010