You’ve decided to go all legal with your business venture and that’s exciting! However, when the time comes to make your business legal, it can also be a daunting process. If you’ve been developing a hobby as a side-hustle or getting professional with some freelancing skills, then maybe now’s the time to step it up a gear. Although it’s a lot of work to do, plus accepting some risks, you might be put off and wondering if setting up a business is justified for all the headaches. But the truth is, the rewards to legalise a business are worth your efforts.
If you’re still deciding whether you should take the plunge and make your business legit, here’s 3 important reasons to help you take the leap.
1. Reap the financial benefits
When you’ve managed to turn a hobby into a profitable business, then it’s a good idea to look into separating your personal bank account from your business income. Many business bank accounts, such as Starling, offer some great perks for first time business owners. In fact, funding for new startups through investors, grants or loans can really be the kick start to expand your business, but only if you run a legal business.
In addition, self-employed business owners can take advantage of the government’s allowable expenses and tax reliefs. For example, if you work from home, did you know you can claim a tax deduction for your home office? Alternatively, if you have to travel for work, then you’d be entitled to claim for business mileage expenses.
2. Protect your business
When you’re running a legal business, the responsibility lies with you to limit the risk involved so your new venture runs smoothly. While we can’t control everything that happens, you can take action to ensure business continuity and safeguard your assets. Therefore, taking out insurance should be a top priority to protect against anything from theft to lawsuits. The type of insurance you’ll need should reflect the kind of business you have. This also includes the risks that need to be covered. For example, working with the public would need a Public Liability Insurance. Alternatively, you might have stock and equipment to insure or employers to take care of.
Protecting your business also refers to intellectual property. After all, you’ve invested everything into the name of your business, for example. Therefore, you need to take legal steps to protect it. In addition to setting up a website, and creating your business brand, you might also want to consider registering it with Companies House. However, this will depend on the choice of business structure you intend to set up.
3. Show you’re professional
There are a range of reasons why you would want to make your business legal in order to show that you’re professional about your enterprise. First off, it gives the impression that you are serious about making a go of your business. In turn, this reflects the long term commitment to both your clients and suppliers. Your reputation is vital in order to succeed, and therefore, many companies may only want to work with registered businesses. If you’re not running a creditable business, you’ll be limiting yourself to a small-scale operation, rather than reaching for the sky! Therefore, one of your first tasks is to register as self-employed with HMRC.
Similarly, some contracts, sales or funding opportunities could only arise from being a legal business. This is especially so if it refers to regulatory situations or for tax reasons. Would you want to buy from someone who can’t produce a receipt or invoice for their services? The majority of customers want to know they can trust a business and feel safe with giving their cash for any transactions.
Where to go next and make your business legal
The best idea would be to devise a business plan outlining your aims and adjectives. This will help you clarify where you are with your business now and how you’re going to develop it. Think hard about your vision for the future so the launch of your enterprise is taken seriously, and becomes a success!