The basics of starting a business, starting a business is not an easy task, in fact, for someone who has no idea, it may seem very daunting and it is likely that it is much easier than it sounds and let’s divide it into three sections, the first section is the idea stage, the second section choose the company structure The correct and third section is to make sure you have a strong legal basis so in this article we’ll talk about the basics of starting a business
The basics of starting a business
The first section: the idea stage
The first stage in starting any business is having an idea that you want to pursue.
Most of the time, this might be the hardest point at any point, so how do you come up with an idea? Well, there are multiple ways.
The first is to analyze a sector and try to identify the weaknesses that this sector currently suffers from.
Remember, you have to make sure that these pain points are
A) the actual pain points and b) very large
If it’s a little bothersome, chances are if your product fixes it, that might not be enough to convince customers to switch.
The second is to identify any pain points in your normal life and chances are that if you have pain points, there are many who are alike.
As before, check carefully to make sure that it is, in fact, a pain point and that many people share that pain with them.
Regardless of anything, make sure your idea follows what you are passionate about.
The main reason for saying this is that if you follow your passion, you probably won’t give up.
Which means you will work and grind very hard to make sure you are successful.
Plus, when you start to falter, you’ll have the willpower to move forward.
Section Two: Choosing the appropriate company structure
There are four different types of company structures you can choose from and don’t worry if you change your mind later, you can switch between them.
Let me quickly give you some details about all of them.
A sole merchant, as the name suggests, is a single individual who runs his own business.
Although they can employ employees, they are the only person running the business and have individual responsibility for the success and failure of their projects.
The advantages of this are that they have complete control over their projects and can run the company as they like.
They also keep all profits without paying dividends and enjoy complete privacy, and registered companies, on the contrary, are required to publicly disclose their information.
However, a Single Trader is not seen as an entity separate from his company by law and subject to unlimited liability.
This means that the individual who manages the business takes responsibility for the debts of the company and is personally suited for the company’s liabilities.
A partnership is a group of people, ranging from two to twenty people, who share responsibility for a business.
They are essentially the same as sole proprietorships and all partners finance the business, which makes raising capital easier than a single merchant.
With many owners, the partnership also benefits from shared responsibility, which means that the business can be divided based on the skills of different individuals.
Partnerships have unlimited liability, which means that their personal income will be affected if the business fails.
There is also a higher risk of disputes and taxes must be paid in the same way as lone merchants, with each submitting a self-assessment tax return and needing to register as self-employed.
3. A private limited company
A private limited company is an entity in itself and separate from its owners.
This means that the founding entrepreneurs can keep their assets and money separate from the company itself.
The main advantage of a private limited company is that the owners are subject to limited liability, which means that the company itself is seen as its own entity and creditors can only look for repayment from the actual company, not the personal income of the owners.
This, in turn, provides many benefits such as giving customers and suppliers more confidence in the work and many large organizations deal only with this form of company.
The disadvantage is that there is a lot of administrative paperwork to offer.
Company information must also be public.
4. Limited Liability Partnership (LLP)
A limited liability partnership is a mixture between a partnership and a limited liability company.
This requires at least two people each with a shared responsibility but there is no upper limit for the partners.
The advantages are both the private limited company and the partnership benefits.
So they are subject to limited liability and also have flexibility as the operation of the partnership is determined by the agreement between the partners.
They can appoint members and not all partners need to be at the same level (senior or junior).
Section Three: Ensure that you have a strong legal basis
This is probably the most underrated section.
Whereas, most people are either unaware of the legal requirements their business needs to fulfill or they do not want to move forward due to the costs associated with complying with the law.