Whether you have a product ready to go to market, an innovative service idea ready to start trading or just want to make money with your blog as an affiliate full time, registering your own home business is the best way of staying ahead of HMRC and making sure your tax status is not subject to doubt and tax investigations, which even if you are doing everything by the book can take away lots of your time and increase your stress levels. The following are probably the most important three things to decide before starting your own home business.

Sole Trader or Limited Company?
You can start your own online business as a sole trader, which means you’d only need to fill in a self-assessment return at the end of the year, or form a limited company. Both types of business have pros and cons, and depending on your personal circumstances and your expected revenue you should choose one or the other. You can use online tools such as the Ltd vs Sole Trader calculator to decide which one is more financially advantageous for you. If you plan on being a contractor you may need to register as a limited company since some of your clients will refuse to do business with sole traders due to unclear legislation about ‘hidden’ employees, such as the IR35, and will only do business with Limited Companies or Umbrellas.

VAT
You don’t really need to register for VAT until your revenue reaches a certain minimum, but if you are starting your own online business you may benefit from signing up voluntarily to the flat rate VAT scheme. Also, if you make a lot of purchases registering for the traditional VAT system may make sense money wise, even if it makes managing your small business a bit more complicated due to the extra paperwork. However, if you already have an accountant or are happy to fill your own VAT returns online (It’s simpler than it looks like) it’s something you really should consider.

Your Company Name
Your company name is going to be the first impression your clients get of your business, and since it’s considerably difficult to change once you’ve been trading and have your business bank accounts sorted you should be careful to choose a good business name. It’s worth spending time researching things such as availability of domain names (You’ll need a website at some point or another, and your company name can be a great domain name) and if there are other businesses with similar names competing with yours on the same niche. You don’t want to send customers to your competition by accident!