It’s the golden question. What do I need to do to raise funding?
As startup finance specialists, it’s a question we get asked a lot from early stage businesses.
It’s so important to understand the fundamentals and we are more than happy to share them. So we are presenting a comprehensive guide to raising that first stage of funding, from the first measures of housekeeping to what to do post-investment.
So let’s start at the beginning:
You’ve taken things as far as you can with the resources you have; you’ve bootstrapped the business to date, you’ve used your savings, you’ve hypothesised a problem and solved it, you’ve identified the market that needs your product, you’ve proved the behaviour of your target users by way of lean MVP and you’ve taken on board their feedback in the future plans for your business.
Good work!! Things are looking great, but to capitalise on this opportunity you need to raise funding in order to take the product from theoretical prototype to a V1 product to test with your users and take it to the market.
So where do you start?
Registering Your Company
In order to run a successful business you need to register a company at Companies House. The fun stuff is choosing your company name! But be aware that you can’t share a name with another registered company. Also remember to make sure the domain name is available! You don’t want to register your name only to find that the perfect domain name is taken. Just look at what happen to Mondo when they changed to Monzo! – Even already established names do it!
You also need to have a registered office address, at least one director and at least one shareholder. A legal statement, to be signed by all initial shareholders, will be reflected in your Memorandum of Association and rules on how you wish to run your company will be written up in your Articles of Association. The link for setting these up can be found here.
Good news; you do not need to appoint a Company Secretary in the UK, well, unless you want to! But you do need to keep statutory registers of the company up to date. This is done by filing a Confirmation Statement annually, which will contain specific details of the company, its directors, shareholders and who has significant control. Just so they know what’s going on.
Once your company is set up and ready to go, it’s important that all your financial transactions relating to your business are recorded through your company. For this, you’ll need to set up a company bank account and ensure it’s used to receive income and pay expenses. Which bank is the best you ask? We couldn’t possibly say! But there are great account setups for all types of industries.
Debtors and Creditors
Your business will rely on you keeping on top of those who owe you money (debtors) and those who you owe money to (creditors) as well as keeping a strict cash flow management system. This will enable you to make sure you manage you funds effectively, which will form the basis of the company accounts upon which you will rely to make important management decisions.
Don’t worry! Tax isn’t as scary as it seems!!
When you start, you will be required to file your company accounts at Companies House within 9 months of the end of your accounting period (normally 1 year) and file a Corporation Tax Return (CT600) within 12 months of the period end.
Corporation Tax will be payable on profits that have no tax reliefs or previous period losses to be utilised. This is will be due for payment 9 months and 1 day after the period end. Don’t be late with this as fines and interest are applicable for late filing / payment so keep on top of this!
Next step – Your Team!
Once everything is set up correctly, you have a grip on your cash flow – or understand what needs to be done with it; it’s time to start thinking about your team. Our guide to creating your team will be live next week!
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