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Would you like to launch your own fashion line or open an alterations business?

If you’re unsure of the steps to take to set up your new business, this article is for you! We’ll walk you through the business basics you need to know to set up, handle customer payments and stay tax compliant while operating. 

Read on to find out more and how Countingup can help. 

Setting up your business

As you’re setting up your new clothing business, you’ll have to register with HMRC. There are a few different ways of doing this, but the easiest and fastest way is becoming a sole trader

Being a sole trader means you get to keep the profits you make, and offers you a lot of flexibility as you run your business. Registering as a sole trader will allow you to pay taxes from your new business’ profits and get access to business support like a dedicated business bank account and small business loans.  

However, if you’re looking to grow your business considerably and launch several new lines, creating a limited company might be a more suitable long-term route for you. If you’d like more information on what other types of businesses you can register and create, find out more in our article How to Set Up Your Business: Sole Trader or Limited Company. For the rest of the article, we’ll discuss setting up a business as a sole trader, but be sure to follow the relevant steps if you’ve chosen to set up a company instead.

Choosing a business name

If you’ve chosen to set up as a sole trader, you don’t have to choose a business name. However, it can help grow your business by having adverts with a catchy title rather than your own name. If you’d like to create a limited company instead, you are required to choose a unique business name. 

In both cases, there are some rules to follow while choosing. Primarily, you’ll need to make sure the name you’d like to use isn’t already taken. Check for existing business names and trademarks using this online tool

Once you’ve found a name that you like and is available, make sure to use it consistently on any future adverts, business cards, paperwork and when registering your business. This can help your business appear more professional and trustworthy to customers, and to HMRC if you’re ever audited. If you want to protect your business’ name to make sure no one else uses it, you can register to protect it

Register as a sole trader by filing for Self Assessment. If you want some more support and information on naming your business when registering, read our article How To Register As A Sole Trader.

Create a limited company by registering with Companies House. If you’d like some more support and information, read our article How to register a company.

Business records you’ll need to keep

Businesses need to keep records of their finances to grow their business effectively and make correct tax contributions. At a minimum, you’ll need to keep records of:

  • The income and expenses of your business
  • Records about your personal income
  • PAYE records for anyone you employ
  • VAT records (if registered for VAT)
  • Grant money you may have received in 2020-2021 if you claimed through the Self-Employment Income Support Scheme because of the COVID-19 pandemic

You’ll be required to keep these records for at least five years after the tax year deadline. 

For example, tax returns submitted for the 2021-2022 tax year by 31 January 2023 must be kept until at least 31 January 2028.

In the next few years, HMRC expects businesses to transition to digital bookkeeping as part of their ‘Making Tax Digital’ scheme. This means you’ll need to use accounting software to submit your tax returns 4 times a year. However, with some expenses and receipt records still provided on paper, finding the right digital accounting software is important. Discover how Countingup can help below.

Finding and managing customers

Clothing businesses can find huge success with online advertising, giving you the chance to grow your business internationally. Knowing how to meet customer trends, manage inventory and handle customer payments will be important at every stage of your new business.

As you start, make sure you conduct market research to find the best target market for your new business. Catering for too many different customer styles can be difficult for small businesses, therefore finding a good niche to begin with is vital. Find out more in our article How to write a business plan.

Advertising your new business

Customers expect businesses of all sizes to have at least a website or social media account these days. Being online can help customers trust your business by letting them find important information like item sizes and delivery rates. Therefore, your new business may also benefit from advertising online. Find out more in our articles How to create a business website and How to use social media for business.

Other things to consider as you set up

As you’re setting up your business, you’ll need to think about how you can add value for your customers, how you’ll manage deliveries and if you need different types of insurance. Consider the following: 

  • Can you provide additional value for customers by offering home tailoring or personalised styling?
  • Do you want to specialise in a specific type of clothing for activities or occasions?
  • If you do more alteration work, should you have premises?
  • Do you need public liability or business car insurance?
  • Do you need to import fabrics and manage customs?

Save time to focus on what matters with Countingup

Launching a new business takes time and effort – so don’t let admin and bookkeeping steal time away from doing what you love. The Countingup app will help you save on the time and stress of maintaining well-organised financial records.

Countingup is the business current account and accounting software in one app. It helps you to automate your business’ financial admin and keep on top of your bookkeeping easily.

Get paid faster with instant invoicing and make sure your accounts are always accurate with our automatic expense categorisation and receipt capture prompts.  And our tax estimate tool will help you know exactly how much to set aside.

Find out more here and sign up for free today. 

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