We, for one day want to provide a fun service for the customer, we aim to make a profit and hope we sell at least fifty cards.
Sources of Help and Advice
There are many sources of help and advice available to small businesses. There is even help and assistance for businesses before they set up. The first source that I have researched is HSBC Bank. This was done through the Internet and looking at their website.
HSBC inform and give advice on writing a business plan. A business plan can be defined as:
“A written document that describes a business, its objectives, strategies, market and financial forecast.”
The website tells you how to write a business plan and how it should be set out. The next stage, according to HSBC, is the forming of a business. Once you have made up your mind to go ahead, you need to get to grips with the legal requirements for forming a business. Setting up your business in the right way keeps costs down. It can also help prevent your working relationships turning sour, one of the major causes of business failure.
Ownership of the Business
There are four main choices for the legal form of your business. If you are a sole trader, you are self-employed, with no special legal structure. In a partnership, two or more self-employed people work together as partners and share the profits (or losses). A limited company is a separate legal entity, distinct from its shareholders, directors and employees. Unlike a sole trader or partnership, it is not the same as the individuals who own or run the business. A limited liability partnership has some of the advantages (and disadvantages) of both a company and a partnership. For example, it is a separate legal entity and can continue despite the resignation or death of some members. We as a group decided that we shall write up a business plan and think everything through before hand so we don't make any mistakes and waste any resouces. The idea of this section is to keep you in control of the business so it doesn't go spiraling into debt. We shall conduct market research and join together to make our business.
My group and I have decided to choose a partnership for our type of business ownership, as a sole trader was not suitable for this type of business activity. The advantages of choosing this type of business ownership meant that we could share the responsibilities of the tasks ahead to make a quick, fast and efficient launch of our advertising and our product as we only had a time scale of two weeks. Here is a list of the advantages of a partnership:
Easy to set up, but a deed of partnership is advisable. These businesses are usually small so less capital is needed. Responsibilities can be shared. Decisions can be shared. And can be run as a family business. Accounts can be kept private. And money comes from the partners.
A partnership is more suitable for our business type as our time scale is small, we can operate effectively sharing out tasks, decisions and paper work.
Legal Requirements
There are certain legal agreements that must be followed before a business can start trading. A partnership is a business run by two or more people together. There should be a written agreement detailing this arrangement. Profits are usually shared between partners according to the agreement. Although profits may be shared unequally, liabilities, which may arise, are shared jointly. This is something that everyone involved should be very clear about. Even if you only own 1% of the business you will still be responsible for 100% of the liability.
A partnership is a very risky type of business to get involved in, just because of all the potential for conflict, and the financial effect, conflict between partners would be likely to have on the business. However, now the Limited Liability Partnerships Act has received Royal Approval and will become Law by the end of the year. There are a number of advantages to LLP including limited liability (as with a Limited Company) and the tax advantages of a Partnership. Your obligations are the same as for a Sole Trader. Your liabilities are the same as for a Sole Trader. The good side choosing a partnership is that often more money can be raised to start the business if more than one person is involved. You will need to keep records for Inland Revenue (and also for VAT if you are VAT registered), but there are no other legal requirements. Each partner should submit a P/SE/1 and you are taxed as an individual. If you leave the partnership your tax liability will follow you (unlike in the past when the remaining partner had to pay it)
