What are the Finance Options to Help Grow my Business?

You’ve been running a little while now, learnt a lot of lessons and had some very late nights and you feel it’s time to take your business to the next level. You won’t always have the cash in the bank or the revenue from your customers to get you there so you may need to source finance. We will go through the basics of the different types of finance and varying sources you can get money from in this article.

1. What are the different sources of finance to help my business grow? 

Bank Finance. The clue is in the name with this one, you can apply to your current or other banks for finance. You will be required to show detailed financial records, present what you plan to do with the money and may be refused.
Alternative Debt Finance. Born out of the last financial crisis, the requirement to have alternative sources of debt finance boomed as SME’s, in particular, need easier methods of sourcing funding. This form of debt often involves less paperwork and the time to complete is usually quicker than bank finance. In return, business Directors’ are often required to provide Personal Guarantees and interest rates are usually higher.
Equity Finance. This is when you give away a proportion of your business in return for money. This can be done publicly or privately, through individuals or firms.
Government and Public Initiative Grants. You won’t have to repay this money but there will be specific criteria you will have to meet. Grants will usually not cover the entire cost of a project and/or growth plan.
Crowdfunding. You will be asked to put a proposal together which will be shown on the crowdfunding platform. You will be required to give something to the investors in return for their investment and this usually increases depending on the amount of money an individual contributes. For example, someone that contributes £50 will get early access to products and some that invests £500 may get a hamper of all your best products. You will also have to give all the money back if you do not hit your initial stated target.

2. What is the difference between equity and capital? 

This may seem obvious but it is important to ensure that you have your terms straight when deciding and discussing with potential investors. Equity describes the control over a stake/number of shares in the business. When investors or firms ask for equity in your business this could be a percentage with you remaining in control, a controlling percentage of the business as a whole or they may want to buy you out completely. Capital refers to the introduction of investment either from existing Shareholders/employees or via external parties. This can take the form of debt or equity.

3. What are some terms to know when looking to finance the growth of my business? 

Equity capital – you are selling a share in the business to the investor and sometimes they will be become an adviser to the business. They will use their expertise in industry to help with top line strategy because the more money the business makes, the more money they make.
Debt growth capital – this is where you take out loans to fund your growth plans and don’t relinquish any control over your business.
Working capital – this is the money you have/need to fund the day-to-day running of your business. It is not used for growth plans.
Growth capital – money you have/need to grow the business in any form, for example, loans, debts etc.
Venture capital firms – these firms will be interested in investing in new start-ups with massive growth potential.
Growth capital firms – will be interested in investing in more mature companies that can see the potential of their growth plans.
Private equity firms – a leveraged buyout, they will be interested in getting the controlling stake of the business.
Public equity – by floating your business on the stock market you will receive money for shares in your business from the public.

4. How do I write a pitch to attract external finance? 

This is where your trusty business plan will come in. You may need to write a couple of different versions to use in your pitch depending on who you are talking to. Government grants will have different interests to private investors or banks. Identify what would make your business most attractive to the audience you’re presenting to and adapt accordingly. Have all your facts and figures to hand and know them inside outside. Practice your presentation and have an elevator pitch ready for those chance meetings with valuable connections or potential investors. Go to your local business growth hub for advice, they will be help you to organise and write your proposal, make you aware of any grants available to you and potentially point you to private investors.

Invoicing for Small Businesses

We’ll look into the basics of invoices and then how you can use invoice financing as a tool to get a quick injection of cash.

1. What is an invoice and why do I need them? 

An invoice is a formal request for payment from a customer that has received goods or services from you. It is an itemised document that clearly states what they brought and how much they will need to pay. Invoices are part of bookkeeping and need to be clear, accurate and organised.

2. What should I include in an invoice? 

Google sheets have invoice templates, so do cloud based accounting systems such as Quickbooks or Xero. You want all your invoices to have the same format and look professional. Ensure you include the following:
Business logo.
Your businesses contact and billing address.
You clients billing address.
Invoice number. These need to be sequential and are essential to keep things organised as they refer to that invoice alone.
Amount due.
Date you issued the invoice. This should be as soon after the goods or services are provided as possible.
Due date of the payment.
In a table you should have a further breakdown of what the services/goods purchased with individual prices. This can be the flat or hourly rate charged. Also have a column for quantity purchased.
Tax should be stated separately. Please see VAT section below for more details.
Payment terms. This is the amount of time you have previously agreed with the client they have to pay the invoice. It’s usually stated as ‘Net – number’. For example, if you’re client has 30 days to pay the invoice the payment terms will be ‘Net 30’.
Personal note. Add a thank you and any other information that you think would be useful for the client.

3. How should I keep track of my invoices? 

The invoice number will help you do this. Set them up sequentially and have your own spreadsheet which is updated every time you send out an invoice. Carry out a weekly review of who is due you pay you and send a friendly reminder if they aren’t a regular client. You can also save a copy of the invoice in folders, think how you would like to organise these in line with your type of business. Is it more useful to organise them by invoice number, month sent or possibly, by client? Most businesses send their invoices by email, save as a PDF that can’t be edited and attach to the message as timely as possible.

4. What’s the difference between an invoice and a receipt? 

Although very similar a receipt is issued after payment, an invoice is a request for payment. Be aware that an invoice isn’t legally binding within itself. To make a transaction legally binding you need to have a contract signed between the two parties or, at least, have an agreement in writing of some sort, for example an email exchange. To cover yourself it is good to outline what your payment terms are, what services/goods you will provide and what the costs will be to ensure you and your client are on the same page.

5. What is a VAT invoice and when do I use it? 

If you and your client are NOT VAT registered you shouldn’t issue a VAT invoice. You should simply charge for the goods/services provided including the information from point 1. If you and your customer are VAT registered you are required by HRMC to provide a VAT invoice for goods/services subject to sales tax. This also applies if the invoice between the two VAT registered parties includes non-sales tax items. VAT invoices look very similar to regular invoices but include a little more information:
Your VAT number
The VAT rate(s) charged
The total amount before VAT
The total amount of tax due
The total amount due including VAT.
Now we’ve gone through the basics of invoices, we’ll explain the basics of what invoice financing is and how it can benefit you.

6. What is invoice finance? 

You can use your outstanding invoices to raise cash for your business quickly. You can sell the invoice to a company or borrow against the invoice, both minus a fee. Some companies will require your company to be a certain size and want all your outstanding invoices sold/borrowed against together, others will be happy to work with smaller businesses and allow you to select which invoices you raise cash with.

7. What are the types of invoice financing? 

Factoring – this is when you transfer your invoice debt to a company. They take a percentage or charge a fee and give you the cash. You have transferred the invoice to them so they are now reasonable for collecting that debt. This is traditional invoice financing and usually involved you handing over a chunk of or all your outstanding invoices.
Selective – this is where you choose which invoices you want to ‘sell’. You may only need a smaller cash injection so this may make more sense as the company will only take the fee from that selected invoice(s) rather than all your outstanding invoices.
Discounting – this is a loan based on your outstanding invoice(s). You borrow money against the value of your invoices and then pay the invoice financing company back after your client has paid.

8. When should I use invoice financing for my small business? 

Invoice financing can be a quick way to get a good amount of urgently needed cash into your business. When deciding on if you think it may work for you consider
Contracts – make sure you’re not tied into long contracts, large contract termination fees, handing over more invoices than you want to.
Shop around for the best percentage – traditionally the majority of invoice financing firms wanted to work with large, well established companies however the industry has change drastically in the past few years with much more flexible plans and options available to you.
Use this as a short-term solution – when you’re a small new business your suppliers may negotiate longer payment terms with you, build relationships with them to get them to pay invoices quicker and use invoice financing in the meantime.

How to Lease Equipment for your Business

Buying equipment outright for your business may be an expense out going early on so you should consider leasing where appropriate.

1. What are the benefits of leasing equipment? 

When setting up your business, depending on the nature of your industry, you may have a lot of out goings to begin with. There are different kinds of leases / finance you can get which we will detail below. You can get 0% interest on some finance agreements, spread out payments to help with cash flow, tax relief on energy efficient equipment and can even have maintaining and servicing included.

2. What types of finance contracts are there? 

Hire Purchase. You will pay instalments and own the equipment at the end of the agreement.
Finance Lease. You will pay instalments but won’t own the equipment at the end of the lease. The rental company will sell the equipment at the end of the lease and you will receive a pre-agreed amount of the proceeds.
Operating Lease. You will pay lower instalments but won’t own the equipment at the end of the lease or get any proceeds from a third-party sale.

3. Do I have to add leased equipment to the balance sheet? 

If you buy or use hire purchase for equipment for your business, it will have to be added to the business’ balance sheet however if you use finance lease or an operating lease it may not. If your total payments, excluding maintenance and servicing, amount to less than 90% of the total market value of the piece of equipment it won’t need to be added to the balance sheet. Ask the leasing agent or your accountant for a valuation if you’re unsure.

4. What should I look for when leasing equipment for my business? 

Do you need to purchase consumables along with the equipment and how is this covered by your payments?
Check the age and authenticity of the equipment, ask for evidence in writing.
Even if you have no intention of buying find out what the market value of the piece is.
What maintenance and servicing are included in the deal? Does it include spare parts? Make sure you’re clear on the costs of these and they are stated separately on the contract.
Check the process if you get faulty equipment or it breaks down completely.
What are the possibilities for the structure of the payments, example a balloon payment at the end of the contract?
Be very specific with the requirements of the equipment you need and what kind of contract would work best for you. Get at least 4 quotes from different companies, 2 larger more well-known places and 2 lesser or local leasers. Know the market value of the equipment, new and second-hand and use this to evaluate the quotes given.

How to Create a Business Strategy

At the beginning and throughout the life of your business you will have to create strategies to give your self the best chance of success. These can be as formal or informal, whichever works for you but should never be underestimated or ignored. Your business strategy will feed into your business plan, will be a ‘working’ document and can be focused on the whole or certain areas of your business.

1. What is a business strategy? 

Your business strategy is the plan outlining how you will achieve your business goals. To begin with these can be informal and in a format that works for you – a long form written documents, excel checklist, flow diagram etc. Set objectives and work backwards to detail how you can achieve these goals. If you are writing a business plan you will use your business strategy as part of this.

2. How do I write a business strategy? 

Carrying out a SWOT (strengths, weaknesses, opportunities and threats) analysis is a great place to start. This can be focused on your industry as a whole, your individual business or your competitors. There’s a thousand different ways to cut the cake with this one so stay top line to start with and discover where you need to focus in on.

3. What areas of my business should I have a strategy for? 

The short answer is all of them! These are the main ones to focus on when starting out.
Overall business high-level strategy. This will include elements of each of the following and set out what your USP’s (unique selling points) are and how you’ll use them to get ahead. Set goals for your first 12 – 18 months to refer to when things get busy and you are bogged down in the day-to-day running of your business.
Marketing strategy. Figure out how to communicate your message to the outside world. See our Marketing basics advice here.
Pricing strategy. Trying to under cut the competition may get you a quick win however it is a dangerous game to start playing as you will create an environment that the only way is down. Competitors may find a way to provide good/services even cheaper and there is no way as a small/independent business you will be able to get prices lower than large multi-national conglomerates within your field. Using a low price point teamed with differentiation or niche targeting may be a wiser way to go.
Social media strategy. This will fall under your marketing strategy but given the power of social media it is wise to have a separate section so you can really plan out how you will utilise social media to maximise its potential for your small business.

4. Are strategies really worth the time taken away from my business? 

“Everybody has a plan until they get punched in the mouth.” – Mike Tyson
This quote may perfectly sum up how you feel when trying to come up with strategies during the early days. Remember strategies are made to be constantly evolving and reviewed continually. Set a strategy day in the diary every month to begin with – and make yourself show up for it! It’ll give you the reset you need and you’ll be able to identify problems and correct plans accordingly. We would leave some space on this day dedicated to research. For example, if your social media isn’t getting much traction put aside time to breakdown and research what competitors are doing, what business gurus advise and what the all mighty google thinks you should do. Also, within this day add thinking time by going for a walk without headphones in to think about the issue. It is very easy to not give yourself space to breath and consider your actions because you are too busy doing them!

Employment Types & Contracts

There are different types of employment agreements, all of which are have legal requirements. Not only this but contracts are very beneficial for both the employee and the employer. There are four main types of contracts that you can use to hire employees, these being permanent, freelance, self-employed and zero-hour contracts. Each of these contract types come with different benefits for your business, so it’s important to understand each of them properly.

What is an employment contract? 

A contract of employment is a legally binding document between an employer and an employee that outlines conditions and legal requirements of your employment, this usually includes but isn’t limited to responsibilities, benefits you could be entitled to and your salary amongst others. If any information changes throughout employment, an updated contract must be issued siting these changes.

Permanent 

This is probably the most common employment contract in the UK. The definition of a permanent contract is one that does not expire and will remain valid until either the employer or often the employee chooses to end the contract. If you’re looking for an employee who is working full time and on regular hours for your business, then this is the contract for you to use.
Full time permanent employees usually work between 35 and 40 hours per week while part time permanent employees will usually work under 35 hours per week. Permanent contracts also cover those people who are salaried or who work for an hourly rate and also entitles the employee to the full range of benefits and employment rights as well as their working hours, terms of payment and their responsibilities.
Advantages 
Disadvantages 
Dedicated team
More administrative work
Easier to plan out future
Increased liability
Potentially higher costs if you offer benefits

Freelance 

If you’re looking to hire freelancers or people who you only need for a set period of time, then you’ll be looking to hire someone on a fixed term contract. Freelancers are ideal if you need temporary and want to avoid potential issues such as training, hiring and employee benefits. Freelance workers frequently work for more than one company at a time although individual contracts may specify sole employment for a time period agreed upon.
Advantages 
Disadvantages 
Cost
Lack of understanding your business
Usually quick and easy to find
Can not invest in freelancers eg. training
Knowledgeable with experience
Uncertain quality of work

Self-employed 

Although freelancers are considered to be self-employed, they offer their services under contract for other people. In the UK, being self-employed is a person working for themselves and often running their own business as a sole trader or as part of a partnership or limited company. Employing self-employed people to work for your business is like hiring freelancers and comes with the same advantages and disadvantages.

Zero hour contract 

Zero hour contracts is a non-legal term which is used to describe different types of casual agreements between an employer and an individual. These are also known as casual contracts and are usually for ‘on call’ work or ‘piece work’ meaning that they are usually on call when you need them, however you are not contracted to give them work nor do they have to accept the work when offered and asked of them. Zero-hour contract workers are entitled to statutory employment rights, including paid annual leave, rest breaks, protection from discrimination and must also be paid at least the national minimum wage regardless of how many hours they work. Zero hour workers are also able to work elsewhere and they are by law able to ignore clauses in their contracts if it bans them from either looking for work or accepting work from another employers.
Appropriate use of zero hour contracts can include:
Seasonal work
New businesses
Special events
Advantages 
Disadvantages 
Easy access to workers when needed
Zero Hour Workers aren’t always available
No need to train new people
Likely high turnover
Lower costs than having permanent staff

How to Start an Online Business in the UK

With changing habits and lifestyles, people have become more aware of how they utilise their time. Online shopping has become increasingly popular over the past few years but never more so than in recent months where physical shops were forced to close their doors and selling and buying online was the only option.
Starting an online business will have some similarities to that of starting a traditional brick and mortar business and in addition there will be other factors to consider. The initial setting up of your business will depend on the type of business you intend to run, where you will be working and whether you will take on people to help.

Get your online business idea 

The first step would be to decide what kind of business you wish to set up. There are a number of websites available that you can use to help determine what kind of market you wish to operate in should you not already know. However, if you are thinking of setting up your own online business, more often than not you usually already have some kind of idea as to what you want to do.
Once you believe you have a viable business idea and have decided on your chosen product(s) or service, it is essential that you carry out market research extensively. By researching and testing out the market you will be able to determine whether your business idea has the potential to be successful or not. Market research can also help you plan your next steps and map out how to set up your business, giving you an idea of start-up costs and any kind of funding that may be available to you as well as helping to define your target audience, pricings you should set and of course who your competitors are.

Create a business plan 

After you have carried out your market research and feel you have a sufficient amount to be beneficial, you’ll need to create a business plan. This is a great way to pull together all that information you have collated and visualise how you see your business in one form of documentation. This will be your working document that you will be able to refer to and add or change over the course of its time. This is also paramount when you are trying to get funding for your business.
Also consider your social media and marketing plan, a presence online is very important and gets your brand out there to potential customers.
For more on how to create a business plan read our advice here and to learn more about how to put a business strategy together read more here.

Choose your online business model 

As you have now established what kind of online business you are going to set up, you need to ensure your online business model suits your plan and gives you a structure to work with. The two main options which tend to be the most popular are ‘sole trader’ or ‘limited company’.
A sole trader tends to be the best option for those people who are looking to start up a small business. You and your company are seen as one entity and therefore any profit or loss will affect your personal finances.
A Limited company will offer you protection as your company is seen as a separate entity giving you limited liability.
If for example you are intending on starting an online shop or selling a product(s), you’ll be operating on an ecommerce business model making revenue from sales.
There are various models that you can choose from but it’s important to pick the one that suits your and your business best.

Decide your business name and register 

Before you register your business, you’ll need to come up with a name. It’s important that you remember to make sure that both your business name and domain for your website are available. It will be much easier for customers to find your website if these match, if they are different, this can lead to confusion and even loss of business as your potential customers can be directed elsewhere.
You can easily check if your business name and domain name are available when National Business Registers search here. Learn more about registering and protecting your business name here.

Prepare for the costs of setting up an online business 

These will vary dramatically depending on the size of your start up business as well as the type of business that is being started. However, some of the costs that will need to be considered are:
How much it will cost to build an inventory of the products you will be selling.
The equipment you would need to use, for example, technical equipment.
The cost of building a website.
Marketing costs and possible outsourcing of this.
Company formation costs, if you decide to go with a limited company structure.
Domain cost, there is usually an annual fee behind this.

Build your website 

Whether you decide to do this yourself or outsource, the website you create should reflect your business and ensure you align your vision with the web developers. Consider the user experience (UX), this should be easy to navigate and use. The aesthetics and logo, ensure your site is appealing and organised and finally ensure your site is mobile friendly, a vast majority of people use their devices to access sites and this is only getting more popular.
If you will be selling goods, consider payment methods and how you will be charging your customers and what online payment system you will be integrating into your website.
There are many elements to consider when starting your own online business using this simple guide to get started can make all the difference and give you that added confidence boost you may need.

What you need to know about HR for your Small Business

The world of the business can be a confusing place. There’s a lot of different facets that you must consider such as finances, sales, marketing and, of course, the minefield that is HR.
Compared to other aspects of your business you’ll probably find HR to be one of the trickiest areas to get to grips with, as it’s based not just on best practice, but on legal requirements that you must abide by. This can make it a confusing place for most business owners, but it doesn’t have to be. There are a small number of basic elements that you need to focus on when it comes to running HR for a small business, and if you get these right, then you have a good basis for further development.

What exactly is HR? 

HR (Human Resources) is the department that’s responsible for the administrative functions of your business. HR teams oversee recruiting, interviewing, hiring new staff, looking after employee benefits, and they can also be involved with areas such as payroll and appraisals.

What are the most important areas that are essential to have the basics of HR covered? 

For a small business there are a few specific areas that are highly important that HR handles. These include:
1) Recruitment
2) Onboarding
3) Payroll

How does HR help with recruitment? 

Having the right team in place to help grow you business is an essential part of the long term health of your organisation. With the right HR help you can ensure that you have a team of employees that have the right skillset to boost business performance. Your HR team can help with this by:
Helping plan out job specifications to meet your needs
Planning interview questions
Checking that potential employees have the right to work in the UK

How does HR help with onboarding? 

Once you’ve hired someone with the help of your HR team, you’ll need to make sure the basics of onboarding are covered as well. Luckily this is something that a HR can help with as well.
A full and thorough onboarding process can take up to 12 months, but it an essential part of your business process that encompasses areas such as:
● Issuing of formal contracts
Legally every employee is required to have written documentation that outlines the key terms of their employment such as pay and working hours. This is required to be in place within two months of the start date.
Contracts should also outline areas such as holiday allowance, pensions and other areas that have statutory minimums. As contracts are legally binding it’s essential that these are handled correctly, and an expert in HR may be needed to do so.
● Managing legally required admin and paperwork
Contracts aren’t the only form of paperwork needed when you’re bringing a new employee in. Other bits of paperwork are needed as well, and HR are primed to help handle this. This not only makes the onboarding experience smoother for the business and new employees, but it allows everyone to focus on their actual job rather than legal necessities that don’t impact directly on the new hires job performance.

How does HR help with payroll? 

Payroll is likely to be the biggest expenditure that your business has, which is why it’s essential that you’re able to get to grips with the process. For small business though this can be an incredibly tricky as they may not have a department to handle it for them. With a HR team or person though, you’ll have someone responsible for payroll who can manage the process for you, keeping your process up to date with laws, and ensuring that everyone is paid on time.

Can Anyone Start Their Own Business?

Being your own boss is an attractive idea, especially if you think about working towards making your business idea turn into reality and you would like some additional income. However, there are many questions to ask when you might not be over 18, might not have the capital or the financial means and you might also have a mediocre credit score. Let’s answer all of these questions next.

Can you start a business if you are under 18 years old? 

If you are wondering if you can start a business as a teenager, the very straightforward answer is yes, but with a few extra challenges or steps. While you cannot open it in your name, have a bank account independent of someone older or have a credit score if you are 16 let’s say, you can get around these problems by having a parent or a guardian help you set up all of the above. Ask around and people you know might be able to help.

Can you start a business with bad credit or no collateral? 

Next you might be wondering if there are loans for people wanting to start a business but have a bad credit score for different reasons. Again, it is not impossible but it might be more challenging. It definitely depends on how bad your credit score is. There are a few banks and lenders that could offer you the financial support for your idea. Additionally, you might have the possibility of asking family, friends or professional connections to help and even form a collaboration or partnership with them.

Alternatives to bank loans for starting a business 

The key thing you need to secure after having your idea figured out, calculating your potential costs and your business registered is investment. You might not have the financial resources because of the reasons mentioned above but there are ways to go around that and see your idea come to life. There are many ways to cut your costs when starting a business and you can secure funding from other sources apart from banks & loans. However, keep in mind you will need a business plan to be trustworthy and people to back up your idea. If you are unable to secure a bank loan due to your age, credit score, or current income, there might be other options available:
Government grants & loans. The government offers support for different industries and regions and you might be eligible to receive support. However, keep in mind that you might need to have a business plan ready, along with projections of profit and loss. Check out the government’s website for more information and the latest updates on the requirement of different types of financial help for new businesses available.
Family help. If you are lucky enough to have a supportive family or friends who would be interested in your business idea, you can present the business plan and your idea in a convincing way. You could offer them shares or part in the decision making process, which would be beneficial for you too as their experience might prove valuable.
Crowdfunding. The various websites online such as Kickstaerte and GoFundMe allow you to present your business idea and plan to strangers who might be interested in supporting it. They can donate or buy your product in advance or you can offer them shares of the company.
To conclude, there are ways to go around different difficulties you might encounter when starting your business in less than ideal circumstances but is nonetheless possible. Don’t be discouraged by your current situation, present your ideas in a cohesive and trustworthy manner and you might convince people to join you on this exciting journey.

How to Start a Business on Amazon in the UK

Amazon is the world’s largest online marketplace where almost anyone can list their products and make profit. It is especially important to note it is a profitable venture for entrepreneurs with minimal start-up capital. However, at first it sounds simple but there is a lot of work involved in order to have a successful business on Amazon. Here you will find some key areas to consider when starting a business on Amazon.

What is an Amazon FBA Business? 

Most products listed on Amazon are from independent sellers using Amazon fulfilment. FBA stands for ‘fulfilment by Amazon’. This essentially means that Amazon holds the seller’s stock and distributes and ships it when orders are made. Additionally, the customer service is also handled by Amazon, including returns.
For the customer, this makes no difference as the delivery options, returns policy and customer service are the same.
An FBA is the middle ground between a very small, bedroom business and a company with a lot of staff. Amazon FBAs take a lot of the weight from the seller’s shoulders by handling part of the operations. The main focus for the seller is getting sales.
Additionally, you can have multiple FBA businesses around the world – you just need to deliver the stock to the Amazon FBA warehouses.
Using Amazon’s FBA is not mandatory – you can choose to be responsible for storing the stock, shipping & customer service but bear in mind that might mean you will need more resources such as money, time and staff.

Establishing your Selling Strategy 

Before registering for an online seller account on Amazon, you will be asked to choose a selling plan. Your choice here should be influenced by your strategy, what and how much you are selling. For example, on the Individual Plan you will be charged £0.75 for each item you sell. On the other hand, the Professional Plan costs £25, regardless of the number of items sold. Additionally, Amazon takes a referral fee from each sale as a percentage of the sale value, depending on the product category.

How To Set Up Your Amazon Seller Account 

Ideally, you would already have a company set up as you will need to provide:
Business email address or Amazon customer account;
Chargeable credit card;
Valid passport (identity verification protects sellers and customers);
Tax information;
Phone number;
A bank account where Amazon can send you proceeds from your sales.
After setting up your Amazon seller account, you will have access to Seller Central. This is the website where you can monitor sales activity, manage inventory and add new products, update your prices, communicate with buyers and solve customer service issues.

How To Source Your Products 

Depending on your strategy, you might be a reseller of popular products or a brand owner who manufactures their own. If you are in the latter category, sourcing your products should already be in place and you might be able to secure your stock in time. For reselling products you could use either dropshipping or be a wholesaler.

How To Add Products 

While you can sell almost anything on Amazon, provided it is not illegal, there are some categories that are open to all sellers, some require a Professional account and some require approval, while some are completely prohibited to be sold by third parties. Check out where your products you intend to sell fit before you choose your selling plan ideally.
To add your products you can do so using Seller Central or via an API, either Amazon Marketplace Web Services (MWS) API or you can build your own.
A Product Listing should contain:
A product identifier, such as GTIN, UPC, ISBN, or EAN to specify the exact item you’re selling.
A SKU, which is a product ID you create to track your inventory;
Offer details, including price, product condition, available quantity, and shipping options;
Product details like name, brand, category, description, and images;
Keywords and search terms to help buyers find your product.
If there is already another seller listing the same products, you’ll match an existing listing. The product identifier might be already in place in this case. Amazon combines data from the different sellers and offers on a single detail page. Sellers can contribute to the listings detail page information and request reviews of that information, to ensure the information displayed is correct.
In the case of a completely new product, a new listing will be created. You can also register the product you own under a registered trademark using Amazon Brand Registry. This is a free service that allows you to have more control over product detail pages using your brand name.
In order to fill out the Product Detail Page you will need to input:
● Title: 200 characters max, capitalize the first letter of every word;
● Images: 500 x 500 or 1,000 x 1,000 pixels to increase listing quality;
● Variations: different colors, scents, or sizes;
● Succinct, descriptive sentences highlighting key features;
● Description: Keywords improve the chances that people will find your listing.

Marketing Your Products 

On Amazon, the most popular products usually feature Prime shipping, which is free to Prime members and provides fast shipping. You can get the badge on your products by using Amazon FBA described above.
You can also advertise your products on Amazon so they show up top of the page. This gives you more visibility and better reach. Another way of promoting your products is using a limited time deal or a discount coupon for customers.
Setting a competitive and fair price is the straightforward way to ensure your success while selling on Amazon. There are hundreds if not thousands of products in the same category and customers are always looking for the best deal.
After your first sale, encourage your customers to leave reviews on the page of the product they purchased. Listings with multiple positive reviews have a higher chance of selling to future customers, as it shows you are a trustworthy and reputable seller.

How to Start a Business (Limited Company)

8 steps to set up your limited company 

These steps will ensure you are compliant and correctly set up with the UK government as a limited company. You can operate as a sole trader which just requires you to register differently with HRMC.

1. Decide if forming a limited company is right got you 

Advantages of setting up as a limited company include; limitation of personal liability, professional status, beneficial tax efficiency and planning. However, drawbacks include; needing to do a more administration, publish your personal details publicly and you will have legal accounting requirements as a limited company. If you are looking to commit to a full-time, more professional venture that you will invest substantial time and effort in growing forming a limited company is a great option.

2. Register your business 

There are several steps to registering your business officially with the government, for advice and help with the process you can use a formation agent. They will save you time, money and stress so you can get to the fun part of running your new company! National Business Register have over 35 years experience forming companies, read more about their services here. You will need to decide on the name of your company, who and how many directors you will have and how many shares each director will have.

3. Employing someone as a limited business 

You will need to pay income tax and National Insurance contributions for each employee so will need to set up a PAYE. This government resource is a good directory for what you will need to cover if you have employees, it also takes you to details regarding your tax self assessment form – get bookmarking!
In terms of employment law – know your basics. A great site for basic legal documents is Rocket Lawyer.
ACAS is a goldmine of informative articles on everything from employment law to workplace Covid advice.
If you’re looking to contact a solicitor our accredited partners, Thursfields have the experience and legal expertise to guide you throughout the life cycle of your business. Read more here.

4. Get an accountant 

It is advisable you get an accountant as a limited business. You are legally required to submit yearly accounts to HRMC alongside your self-assessment forms and Confirmation Statements. Ask friends, fellow business owners and find out more about our accredited accounting partner, Stewart Associates, here.
Remember to keep organised and maintain detailed financial records of everything to do with your business. It may be boring and the last thing you want to do at the end of a busy day but future you (and your accountant!) will love you for doing it. Download your accounting software to your phone to keep organised even on the go.

5. Do you need to register for VAT? 

If your businesses turnover exceeds £85,000 per annum you have to be VAT registered, register here. If you are under this threshold registering is an extra process however it does mean you can claim VAT back on goods and services you use for your business. If you are setting up as a limited company you are probably quite serious about making a go of your business so if you don’t register for VAT (which gives you the ability to claim VAT back on items purchased for your business) you are effectively paying 20% more than you should for anything that includes VAT (which is most things). Just remember to keep those receipts!

6. Understand your tax 

Tax is one of the main factors that sway people to form a limited business. As a sole trader you can pay between 20%-45% tax on your profits whereas a director of a limited company will pay 19%. However don’t go mad spending 81% of your profits, there are other costs, especially with employees (see point 3) limited companies are responsible for. This is where having an accountant comes in really handy. Also having accounting software such as Xero, QuickBooks or Sage will keep things organised on the go.

7. What insurance do I need? 

There are legal requirements for insurance but this decision is also influenced by the type of business you have and how much ‘peace of mind’ you want to pay for. We’ve outlined a few basic forms of insurance below to get you started.
Employers Liability Insurance – this is the only legally required form of insurance for a small business owner. This is to cover any employees that are injured whilst working for you. If you operate with no insurance and have staff working for you, there can be a penalty of £2,500 per day.
Management Liability Insurance (Directors’ and Officers’ Liability Insurance) – this covers the individual directors personally rather than the business as a whole. This can be helpful if things do go wrong as directors are open to having claims of malpractice brought against them with potential fines, disqualification (this will mean you won’t be able to be a director of a future company) and even prison sentences. When taking out this insurance check your policy covers insolvency and large shareholders (over 15%) as many policies do not protect you in these cases.
Public Liability Insurance – this is to cover customer injury. Accidents do happen and not having this insurance if you have a shop/salon etc could be costly. Also note some clients and suppliers may request you have this insurance as part of your contract with them.
Contents and Portable Equipment Insurance – this covers all the technology and physical belongings you use to operate your business. If you are running your business from home and have contents insurance it’s worth checking the wording of your policy as some do not cover equipment used in a commercial capacity.
Professional Indemnity Insurance – this is for businesses that offer advice or consultancy services. This insurance will cover you if a client of yours makes a claim against you stating they have incurred financial loss after acting on your advice. In these industries clients may insist you have this form of insurance and it will help bolster your professional reputation if you do.
Cyber insurance – this will insure you against any claims made if you have a data breach. You should consider this insurance if you hold large amounts of customers data and/or sensitive customer data. This may become more important as you grow and will be valuable to have as you build the data on your customers to optimise your marketing strategy and potentially increase your product/service offering.

8. What are your responsibilities as director? 

The term director does come with some legal responsibilities. Alongside ensuring your business is compliant e.g. has licenses with the local authority and/or the correct insurance for your employees there are some actions you will need to do.
Ensure your corporation tax is paid
File annual accounts with HRMC
Write the companies ‘articles of association’ when you form the company and then follow them. These can be updated after registering
Keep detailed company records and report any changes in a timely manner
Notify other shareholders if there is a possible conflict of interest where you will personally benefit from a purchase the business makes
If you follow these steps you will have a compliant and solid foundation from which to grow your business. If you’re still unsure, we’ve outlined the main differences between being a sole trader vs limited company for you. Alternatively if you’ve decided becoming a sole trader is the best option for you read our guide on how to set up as a sole trader here.