4. Other Considerations

What about VAT?

If your turnover is more than £ 64,000 in a 12-month period (at the time of writing – check with your local Revenue and Customs office or accountant to see if this is still the current level), you have to register with Her Majesty’s Revenue and Customs for Value Added Tax (VAT) and add a charge of 17.5 per cent to your bills. Below £ 64,000, you can register for VAT if you want to. Being VAT-registered will entitle you to claim back VAT on your expenses (more on this in Chapter 5) and can give the impression of a bigger business, but you will have to file VAT returns every quarter. Also note that certain clients, such as those involved in insurance, education or transport, are not able to reclaim VAT, so, for them, registering would effectively make your fees higher than those of non-registered competitors.

You will probably want to weigh up whether the size and status of your business will warrant the extra effort you will have to put into being VAT-registered. In any case, you should keep an eye on your turnover once it starts to creep up towards £ 64,000 in a 12-month period as there are penalties for not registering when you reach this limit.

In any case, registering for VAT once you are up and running is a very straightforward affair. Although it does involve more work, and there are penalties and interest charged on unpaid VAT if you miss filing deadlines, you might find that preparing your accounts every quarter helps you keep better track of how well your business is doing.

Also beware that the threshold for VAT is on turnover, not profit, so you may have to register in any case if you are handling large-value jobs, such as print work, that you recharge directly to your client(s).

Naming your business

Since you will effectively be selling yourself and your skills, there is no need to come up with a fancy name for your business. Your own name should be the one you promote. The exception to this might be if you feel it is important to emphasise that more than one person is involved in the business, for example if you decide to set up a partnership or a limited company. In the first case, you might want to reflect the nature of your business in its name: ‘Joe Bloggs Partners’ or ‘Joe Bloggs Partnership’ for instance. Another option might be ‘Joe Bloggs Associates’. If you have a limited company, you might want to get away altogether from any association with your own name, although you cannot set up a limited company with the same name as someone else in your line of business. You might also find there are few word combinations that can usefully and meaningfully be applied to your company and which have not been taken already.

A further consideration is whether or to what extent you want to promote your business over the internet. You will probably want to check whether the name you want to trade with has not already been registered on the internet by someone else.

If you have a website, its domain name is a unique method of identification by which people can find it, a bit like a postal address. Like postal addresses, you cannot use one that has already been taken; and following the explosion of internet services in the late 90s, many have.

You can find this out easily through any number of domain name registration services. Your internet service provider (ISP) will probably provide a domain name look-up feature on its home page; otherwise, you could try www.netnames.com. For more on promoting your service online, see Chapter 6.

Stationery

While you are working out what to call yourself, you may well start wondering whether you need to get professionally designed and printed business cards and stationery. These things can all help you project a more professional image and business cards, at least, can be useful in helping you get your name and contact details about. They are not an essential prerequisite for your business, however.

When you do get round to designing your stationery, either on your own computer or with professional help, make sure you remember to include all your contact details: address, phone and, if you have them, fax, mobile, email and website. Also, if you are relying on your own design skills, try not to get too carried away with fancy typefaces or desk-top publishing effects unless you are a reasonably able designer. You will get a more professional look with a plain, understated layout.

Getting your priorities right

There is an argument to say the first thing you need to worry about when you set up your business is not the business itself, but making a profit; selling your skills, getting commissions and completing work quickly so you can invoice your clients and be assured of money flowing into your shiny new coffers.

This is undoubtedly true and some aspects of setting up a business make it easier to concentrate on profits. Income tax, for example, does not need to be paid until well over a year after you have got started. But, clearly, ignoring your tax affairs for this amount of time is hardly a recipe for success.