New year, new you, new business
Setting up a new business in the new year? What you need to think about and not just from a commercial property perspective.
Over Christmas and New Year we relax. It’s a holiday, but it is also a period when we take stock and make resolutions that the coming year will be better than the last. Can life be different? Can it be better? Can I change?
New Year’s resolutions
Over Christmas and New Year we relax. It’s a holiday, but it is also a period when we take stock and make resolutions that the coming year will be better than the last. Can life be different? Can it be better? Can I change? It may the starting point to say give up smoking or stop biting nails. On a more serious note, it may be a point to reassess your career. The New Year is often the time when we make a decision to make a change and, in some cases, go it alone. Will you make the break? Would you be willing to make a leap and leave your job to start your own business?
Looking before you leap
Running your own business is rather like being in a yacht at sea – you have complete freedom to steer your boat in any direction – you can go as fast or as slow as you like but you could also steer in the direction of an iceberg. Before you think of anything else, you must consider your plans carefully. Giving up the security of a job must be balanced against the freedom of working for yourself.
You must prepare a business plan. Think about what demand there will be for your product / service, how you will pay the bills and most importantly how you will pay yourself. It may take time to establish your business and for a cash flow stream to flow properly. If you borrow money, you must be confident that you can pay it back. Not all loans are the same so shop around for the best deal.
If you have made your mind up that you will make the jump and start your own business, the following will help steer you a safe course between the icebergs.
Regulation of undertakings
The States control businesses in Jersey under a 1973 law called the Regulation of Undertakings and Development (Jersey) Law, 1973. All new businesses must apply for permission to trade and consent will only normally be given to people who have been in the island for five years or more. Under the same law, the States control who may be employed by the business. You will need to have permission before you start up.
Linked to the permission, you must think about whether you will use a company to trade or perhaps a trading name. Both require consent from the Financial Services Commission. A company may be a useful safeguard against business failure as liability is limited, but this must be balanced against the ongoing administration costs.
Certainties in life – tax
One of the certainties in life is tax. You cannot escape it and you will have to pay it. You may need to consider being registered for GST. To start a new business you will have to register with income tax and also with social security. You may be paying the rate which applies to the self-employed and if you have employees, you will have to make deductions from wages to pay these contributions.
Your staff are your business. It will not function unless you choose the right person for the right post. Choose your staff wisely.
You must also have the licence to engage them under the 1973 law. In addition, your new staff member will need a contract. The contract will have to specify things like rates of pay, holidays and maternity leave. You will have to abide by the employment law and you will have to deduct tax and social security contributions from their salary and pay for compulsory insurance.
All businesses are subject to safeguards about data protection. Information about or from customers needs to be treated carefully. There are rules as to how it may be used. There is also a requirement to register your business with the Office of the Data Protection Commissioner.
For some, it will be enough to have home as an office. For the more ambitious, premises will be required. Most people starting out will look to lease premises. You must be careful. A lease is a contract and in Jersey its terms may be strictly enforced.
The following are a few things to think about:
- Location, location, location – where is it?
- How big is it?
- How long is the lease? Will it outgrow the premises before the lease comes to an end? Is the lease too short for me to make long term plans?
- What is the rent and when will it be increased?
- When is it paid – monthly or quarterly?
- Who will be responsible for repairs on which part of the building?
- What rights have I to assign the lease to a new tenant or give notice to cancel it?
- What is the condition of the building?
- What repairs and maintenance will I need to carry out now and in the future?
- What will I need to do to it to trade from it?
Depending upon your type of business you may need various permits. For example, these could be as diverse as registration to practice as a doctor or, for a restaurant, permission to sell alcohol and food.
Before making any big step in life it is always sensible to take advice from experts. Once you have a plan, Viberts can help to put it into action. Call us on 01534 888666.