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Aside from legal requirements and demands from customers to have a certain level of liability, you might well think that there is little point to your insurance policy.

However, there are many examples of businesses going to the wall following a disaster for which they weren’t covered. Similarly there are many instances when a company has bounced back after it looked like it had passed the point of no return – all because they were insured to the very hilt.

I heard about a business in Cumbria, who lost everything (6 shops) overnight in the floods this year… But actually they lost nothing, because their insurance covered them for a full re-fit, re-build, and they paid the business the daily takings while the shops were being done up…

You might consider the risks that your business faces to be small or even affordable, but if this is the case then there is a very good chance that you are underestimating them.

The chances of your business being hit by a flood or destroyed by a fire might seem low, but disruption to your work can come from many quarters.

A criminal act in your street could lead the police to cordon off the area for a period of time. Despite not being able to trade, you will still have to pay your staff, rent and other costs. You could lose a very significant amount of business or incur heavy costs while attempting to maintain it.

However, all of this could be prevented with a business continuity insurance deal.

As mentioned, some of your clients might ask about your insurance details before they are prepared to do business with you. Public liability is important for many clients, particularly in the public sector.

In a business-to-business setting, an insurance policy acts almost like a credential. By having a high level of cover you are demonstrating that you are a respectable business which takes health and safety very seriously, and that you fully understand your own responsibilities.

Therefore it isn’t just dead money, but a way of accessing opportunities which you wouldn’t otherwise be able to gain.

Top tips to keep your premium down
The best way to keep your premiums down is to make your workplace as risk free as possible: 

Carry out a health and safety check
Are all your fire exits clear? Has all the wiring and electronic equipment been checked? Are staff fully trained in the use of equipment and for lifting? All of these are key questions you should answer and ideally have a strong paper trail to back-up the fact that you have taken measures to that effect. 

Listen to your insurer
If your insurer requests that you make changes then you are well advised to do so. Insurers don’t like to have to pay out so they can be strict on the rules if you make a claim. However, businesses that are compliant and pose less of a risk can enjoy better premiums because insurers know that they are a good bet.

Draw up a health and safety policy
All businesses with five or more employees need to have both a written health and safety policy and a health and safety management system. But even if you don’t have that many staff then it is a good idea to do so as such efforts will be welcomed by an insurer. 

It is also a good idea to involve your staff in the creation of your policy and to ensure they’re given a copy of the document. The policy should make it clear exactly who’s responsible for every aspect of health and safety. 

Revise safety regularly
Your business situation can change over time so update it on at least an annual basis or for fast growth business every six months or even quarterly. You might need to update your policy as a result of this.
 
Communicate with your insurer
Make it clear to your insurer exactly what measures you’ve taken to reduce the risk in your workplace and produce all the necessary documentation. This is also a good time to ask for a better deal.

For business Insurance quotes please go to: http://www.simplybusiness.co.uk

Setting up your company…
Once you have decided on your business idea, you will need to choose what sort of business you want to run. When it comes to setting up a company there are a number of types that you can choose from. Are you going to operate as a sole trader or as a limited company? Don’t worry if these terms mean nothing to you – this section provides all the information you need to know before you go about setting up a company. From sorting out your business structure to the tax implications involved. Ensure you read this section before you enter into the process of setting up a company.

Registering as a sole trader
If you want to go it alone in business you’re not alone. A massive 71% of all British businesses have no employees according to Department for Business Innovation and Skills (BIS) figures. So you could say that sole traders pretty much drive the UK economy.

The popularity of this type of business reflects the ease with which you can start sole trading. Registration is straightforward, record keeping is simple and you get to keep all the profits after tax.
Starting small by sole trading is a way to test your chosen market – many companies are born this way. But there are pitfalls; if your business fails, you will have to pay for that failure out of your own pocket.

What is sole trading?
There are three basic types of business ownership; sole proprietorship or sole trading, partnership and limited company. Sole trading is when an individual is the only owner of the business and has complete control over the way it is run.

The law makes no distinction between the business and a sole trader. This unlimited liability means that any business debt can be met from the owner’s personal wealth if the business fails. And the business usually ceases on the owner’s retirement or death.

A sole trading business is usually small in size, with a low turnover, and few, if any, employees. But there are an estimated 3.7 million active businesses in the UK and over 2.3 million of these are class zero businesses – that is businesses without employees.

This majority of sole trading enterprises are in the service sector, including photographers, plumbers, hairdressers, shops, real estate agencies and bed & breakfast hotels. Some 24% of the UK’s 2.3 million size class zero businesses are in the construction sector and 18% are in business-related services.

Getting down to business
You will need to fulfil certain legal requirements before you can open for business;
Put it on paper:
If you are going to trade under a name different to your own personal name you must display the name/s of the owners and an address where documents can be served on all business stationery and at your premises. Design letterheads, business cards and signage accordingly.

Use the right name: 
A business name means the name of your business if it is different to your your own name. 
It is not compulsory to register a business name but you can do so with the National Business Register.
You also need to be careful about choosing a name since the wrong name can get you into difficulties.
Certain words and expressions like international, federation and registered are restricted under the Business Names Act 1985 and the Company and Business Names Regulations 1995. Companies House and the National Business Register have lists of these words and details of how to obtain approval to use them.

Your business name can not be the same or too similar to that of another business, trademark or company. If it does conflict you could face legal action from its owner. Check phone books, trade journals and magazines to ensure against clashes and you can run free name checks against all these via the National Business Register as well as the Trade Marks Register and the Patent Office and the limited companies names index at Companies House.
To be absolutely sure that you can use a name, contact a solicitor to perform the checks or register your name with the National Business Register who will do the checks for you and ensure nobody copies it the future or passes it off as their own.

Inform the authorities: 
You must register as self-employed with the HMRC within three months of starting up or face a £100 fine. The three month limit starts from the last day of your first month of trading. Find out more about registering as self-employed here

Forming a limited company – the required documents
When registering a limited company there are four documents which must be provided to Companies House. These are:
Memorandum of association
This document sets out the following:
The company’s name
Where the company’s registered office is located – England, Wales or Scotland
What the company will do – this can be as simple as: ‘to conduct business as a general commercial company’
Articles of association

Here’s where you set out the rules for running your company. You must state how shares will be allocated and transferred, how the directors, the secretary and your meetings will be governed.

Once your company is incorporated you can only make changes if the holders of 75% of the voting rights in your company agree, so it pays to get this right at the outset.

Form 10
This document gives details of the first director(s), company secretary and the address of the registered office. Company Directors must also give their name, address, date of birth, occupation and details of other directorships held in the last five years. For Northern Ireland use Form 21

Form 12
This document is the statutory declaration of compliance with all the legal requirements of the incorporation of a company. It must be signed by either one of the company directors or secretary named on Form 10, or the solicitor forming the company. The signing of the document must be witnessed by a solicitor, a commissioner for oaths, a justice of the peace or a notary public. For Northern Ireland use Form 23

Form 12 must not be signed and dated before any of the other documents are completed, signed and dated.
Where can I get these documents?

Form 10 and Form 12 can be obtained for free from the Companies House website.
  
The memorandum and articles of association can be obtained from legal stationers, accountants, solicitors or company formation agents.

If you wish for my accountant to set up all of this for you, email me and I will have her call you.
What counts as self-employed?

If you make all or part of your living by working for yourself – not through a salary or commission from an employer – then you’re considered self employed.

If you are self-employed your tax and national insurance contributions are not paid at the time you receive payment, and you are therefore bound by law to declare your earnings to HMRC.

If you receive any payment for a service you have provided or a business you operate, this requires you to register with HMRC, but does not necessarily mean you earn enough to require you to pay tax.

You must register as self-employed within the three months of starting trading otherwise you will be liable to pay a £100 fine. Click here to fill out the online form to register as self-employed.

The increase in popularity of online businesses had led to an increasing number of people setting up part-time businesses for additional income to their main job. As a result, many people are unsure what they have to declare for tax purposes and at what point they should register as self-employed.

When does selling a few items on eBay turn into a business, and therefore a taxable activity? HMRC rules stipulate that all e-traders must be registered with them so that their income can be taxed.
You are an e-trader if you:     
• Sell goods that were bought with the intention of re-selling them
• Sell items you made yourself for a profit
• Sell or buy on behalf of others for financial gain
• Receive payment for a service

If you can answer yes to any of these questions then you must register as self-employed with HMRC within the three-month deadline. With regards to eBay, it is extremely unwise to delay registering, as HMRC carries out checks on online auction sites to root out members who process a high number of transactions.