Do I need to raise finance?
If you have enough of your own capital, convincing others to invest in your business is not an issue. However, when seeking a bank overdraft or loan, applying for certain types of government aid, or when trying to attract new investors or partners, you will need to present a convincing picture of your business’ financial condition and future prospects.The Accounting Group – one of the support businesses Romeo has interests in – will know exactly what information is required and how it should be presented to give you the best chance of success.
Your own money or that of friends and family?
Personal funding of a new business may come from personal savings; money released from the sale of other assets or from re-mortgaging your home. Asking for finance from your friends and family may be a sensitive issue that can test your relationships, but people who know you personally may be more supportive, particularly if they have also run a business. It is advisable to daw up a written loan agreement, which should set out how, for example, you intend to repay them. This makes it clear that their funding is a business investment and not a favour.
Bank loans and overdrafts
An overdraft may often be a good way to finance a temporary or fluctuating cash shortage. Where a longer-term commitment is involved, a bank loan can be the easiest and most suitable form of finance.
The government and the EU may provide financial assistance in some circumstances. This may take the form of cash grants, tax concessions, funding of training or relocation, subsidised rents and so on. Assistance schemes vary from year to year, from industry to industry and from region to region, with most assistance being concentrated in areas of high unemployment.
Other sources of finance
Other possible sources of finance available to a business owner range from start up loans to venture capital provided under, for example, the enterprise investment scheme or regional venture capital funds. Alternatively, it may be possible to arrange finance from a merchant bank, some other financial
institution. Though your own and your adviser’s contacts, you may find new investors to increase the share capital.
Regardless of which sources of finance or support you intend to approach, you will need to present a convincing picture of your business’ financial condition and future prospects. The Accounting Group will know what information is required and how it should be presented.
Who do I need to notify?
If you have chosen to be a sole trader you must notify HM revenue and customs (HMRC). You can register your business using HMRC online services. Businesses which reach the threshold for compulsory VAT registration (this threshold is revised every tax year) must notify HMRC. However, it can be advantageous to register even if you are below the threshold. To register for VAT you must notify HMRC. Depending upon the nature of your business premises, there may be other bodies you should notify, such as your local authority. If you create a limited company, you must notify Companies House, who will then notify HMRC. HMRC will send you a form that you must complete and return within three months of issue.
What do I need to think about if I am buying a business?
Sometimes an entire business or its assets can be acquired as a going concern. One of the main challenges of buying a business is agreeing the amount that it to be paid and on what terms, as there is rarely a market comparison available. The Accounting Group can help you assess the value and can also help you to negotiate the deal.