How to form a business

1. 1 Involve your professional advisers (eg your accountant) from the outset.
2. 2 Consider whether you will be in sole control of the business or will share ownership or involve external investors.
3. 3 Consider whether a company or limited liability partnership (LLP) will offer worthwhile financial flexibility, protection of personal assets and credibility with customers, suppliers and lenders.
4. 4 Consider whether the administrative burden and costs, and the disclosure requirements, of a company or limited liability partnership will be justified.
5. 5 Investigate the likely effect of different business forms on your tax and National Insurance position.
6. 6 Choose the most appropriate business form: sole trader, partnership, LLP, limited company or social enterprise.
7. 7 Draw up an agreement with the key individuals involved covering, for example, strategy, remuneration, responsibilities and 'what if' scenarios.
8. 8 Choose a trading name; check that it is permitted, and is not already being used by another, similar business.
9. 9 Use a company formation agent (or your accountant or solicitor) for the legal formation of a company or limited liability partnership.
10. 10 Check any legal requirements (eg licences) with your local authority and organise insurance.
11. 11 Contact HM Revenue & Customs to organise tax and National Insurance (and PAYE if you will be an employer); if necessary, register for VAT with your VAT office.
12. 12 Organise systems to keep records and ensure that you can comply with statutory requirements (eg filing annual returns).

Cardinal rules