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Setting up your business | Your HR practice
Setting up your business can be extremely exciting but at the same time daunting. Many HR Independent professionals and business owners set up their businesses after successful careers in the corporate world.
The reasons for starting your own business may vary. These may include flexibility, better work-life balance, and making a difference to your clients. Others start their businesses after being made redundant or when personal circumstances, such as becoming a carer demand it.
It is common to start by packaging your offering around the skills and experience that you have gained. However. It is important to pay attention to what your customer needs. This will come from understanding your target audience. What is their pain point? What problems do they have that you can resolve? How can you resolve them? So, you have identified your ideal client and established that there is a gap in the market for you to fill. This has energised you and you are wondering where to start.
Choosing your business Name
There is a lot in a name. Your name is a key aspect of your brand. It should be memorable and reflect your business. You need to choose a name that stands out. It is harder to sometimes choose the right name for your business. You may settle on a name but soon realise after a quick search that it is already taken. A quick search on Companies House register will inform you if your chosen name is unique enough.
You can also search for a trademark to ensure that you do not use a name that has been trademarked by another organisation. This way, you can avoid legal battles. Equally, you can also protect your business by trademarking your business name. This is straightforward to do yourself.
You may also benefit from doing a quick google search for reviews on companies that bear similar names to the one that you intend to choose. That way, you don’t put a lot of energy into demonstrating that you are not that organisation with a bad reputation.
What type of Business do you want to set up?
You need to think about whether you would like to set up as a sole trader, partnership, limited liability partnership or limited company. Most Independent HR professionals operate as sole traders or set up limited companies. There are advantages to each type. You must consider and understand the tax implications and liabilities before making your decision. Seek advice from a tax expert or your accountant on the benefits and what may be the best choice for you.
If you start as a sole trader, it is easier for you to register as a limited company, when you decide that is the best route for you. You should register with HMRC for Self-Assessment as soon as possible. But you need to do this before the 5th of October after the end of the tax year in which you became self-employed. For example, if you started trading in June 2021, you must register with HMRC by 5th October 2022.
If you set up a limited company or limited liability partnership, you must register with Companies House. The registration must be completed as soon as possible. If you register your company and do not trade until a later date, you must inform HMRC within three months of business activity.
You will also need to register with HMRC for PAYE if you employ someone or pay yourself a salary.
You do not have to register for VAT unless you reach the taxable turnover threshold of £85,000. Some businesses choose to become VAT registered from the onset. It may be worth discussing with your accountant or tax advisor the pros and cons of your voluntarily registering for VAT.
It is important to keep your business and personal finances separate. It is easier to track expenses and do your tax returns and your accounts. If you are a registered company, you should have a separate business account.
In selecting your bank, you need to consider bank charges. Most banks have reasonable charges for business accounts. The bank should be able to provide you with information on all applicable fees. For example, fees for foreign payments.
You must also consider whether you would like to use a bookkeeper and an accountant. Most accountants and bookkeepers may have preferences for the type of systems they use with their clients. Speak to your accountant and/or bookkeeper about systems. There are software systems available for logging your receipts and expenses. These can be linked to your accounting software. This makes it easier to do your accounts. Even if you are unsure of what system to use, it is still important to keep good records of your business activities, right from the onset. You can use tools such as spreadsheets to log your activities.
It is important to think about your brand as part of your start-up activities. It does not need to be perfect. Your brand is your business’ identity. Your clients will remember your brand if it is memorable. You need to decide on your logo, colours, brand images, the messaging that you want to send across to your customers and the value you will bring to your clients.
Your brand will help you to stand out. As an HR Independent Consultant, you are a key part of your brand identity. People who buy into your brand are doing so because of you.
Deciding on the best way to market your business
You may wish to consider whether you need a website for your business. If you choose to build a website, you may want to consider the purpose of the website. That is, whether you want to use it purely as a landing page so that people can find your business online. Or use it as a lead generation and/or sales tool. The purpose will determine the type of website that you may end up getting built for you.
Social Media Channels
Understanding your target market and your ideal client will help you choose which social media channels to establish your presence and authority on. There are so many different channels businesses use to communicate with their clients and prospective clients. Depending on how much time and resources you can dedicate to producing content for these channels, you may wish to start with a couple and focus on mastering your messaging on those channels and engaging with your audience.
You may also want to start building your network followings. Many HR Consultants use their personal profiles to advertise their businesses. Others build business profiles for their businesses. Again, the choice is yours, but you may want to think about whether you want to run multiple pages or stick with one for any one channel.
Photo by Paige Cody on Unsplash
IT Systems Management
Your IT is an important part of your business and is critical to business operation. Ensure that you have the right system set, and adequate cybersecurity measures in place. A good backup system and that you use secure systems.
You can outsource your IT or sign up for the services of a cloud services provider. This will help you to protect your business.
HR professionals routinely process employees’ data. They are often data processors; the clients are typically the data controllers. In several cases, such as when you take on an employee, you may be the data controller. You will therefore need to register with the ICO.
You will need to put in place professional indemnity insurance. If you operate in a place where you have visitors and members of the public coming into your offices, then you will need public liability insurance.
If you employ anyone, you will also need employer liability insurance.
HRi’s accreditation standards offer a fantastic framework for setting up, running and growing your business. Becoming an independent consultant can be lonely. HRi offers a strong and collaborative community. And expert advice to our members. With our directors having been through the journey ourselves, we can share our experiences and lessons learnt along the way. We understand the journey that you are about to embark on.
Setting up and running your business can be rewarding and fun. But it takes hard work and commitment. Many consultants never look back or go back into employment. Good luck on your journey.
Thinking of starting your own HR Practice? Get a copy of our startup checklist.
Author: Mary Asante | Director