This article is all about how to set up an official private limited company, but to write about that subject requires me to make some assumptions. Without any, I’d have to write an entire book. So here are my assumptions - if more than a couple of these hold true, read on:

1. You’ve got a ton of ideas and are struggling to find time to work on any of them
2. You’ve hardly got any money to use to seed a company
3. You want to build a company, a brand and/or something you can point to and call your own
4. You live in the UK

The last one doesn’t preclude you from enjoying this article, but I’m going to focus on the specifics of starting up in the UK, because that’s where my experience lies. The bootstrapping blog has a guide for any Americans reading.

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One of the constants of (UK) business seems to be late payment. I’ve seen many articles written about this, and it’s an unfortunate situation. But the reality is that when you send someone an invoice, the chances are that you’re not going to see the money for well over a month for the following reasons:

1. You have to give a “reasonable” payment period on the invoice, which can be anything from 14 to 60 days. (30 days is fairly typical)
2. Clients will often count the date of the invoice from when they receive it, not when it’s dated
3. They have to send you a payment, and they will use 2nd class mail
4. It’s likely the payment will take at least 3 days to clear

All in all, it’s a difficult situation when you’re on a tight cash-flow.

And people pay late.

So is there anything you can do about this situation, or do you just have to starve for your first two months of business? Well, if you’re bootstrapping your business it’s less of a worry, but in high-level terms, you have two choices:

1. Join the culture - make sure you pay the bills that you receive on the last possible day and earn the extra few pounds/pence from the interest of having the balance in your account
2. Fight the lack of good manners - pay your bills in a reasonable time, (eg. in the middle of the period) and politely demand that your clients do the same

I pass no judgement on either. Whichever is right/best is left as an exercise for the reader.

When they talk about small companies, people often seem to get very scared about “looking like an amateur” and treat it as a big bad bogey man who must be appeased at all cost. Granted, everyone wants to look professional, no one wants to appear incompetent, least of all to their prospective clients or customers. But most of the time, these people are not really concerned with the professionality of a company at all, they’re scared to death that someone might see the human side of your business.

This fear of the human touch is endemic, from the roots of government right to the franchised shops and banks on the high street. Behind the scenes, call centres generate a total lack of personality - even when an operator gives their first name, who ever rings up later in the week and actually asks to speak to them?

In some instances the Internet can make things worse. Automated ticketing systems for technical support are meant to improve accountability, but the reality is that they often give a large support group a wall of anonymity to hide behind. In some organizations, a single ticket is picked up by several different staff member and any notion of being helped by a real person vanishes. Unless rapid resolution occurs, customers can easily be left feeling frustrated and under valued. The workers in this process are also left feeling uninspired because they do not get to build any kind of relationship with the customers.

Employees count

When your company is small, the people in it are what count. In the early months of a business, they may be the only thing that differentiates your company. They all need to be able to talk to your customers, and your customers need some visibility on who does what.

My message: be bold and show that you’re a person. We’re all people, so when friends and family warn you about being too personal, be kind but firm with them. Before hiring your first employee, you’re all you have - say NO to becoming a faceless corporation!

I hope the mere existence of this blog reveals something about my own personality, but as the site grows in the coming weeks, I’ll be adding more information about my background, (including why I think I’m qualified to do what I’m doing).

Crossbone systems was formed electronically with Companies House on the 21st of November, 2007. Using myself as the example, the dates on documents I have received indicate that it takes only two days for HM Revenue & Customs to receive notice that the company has been formed. Pretty impressive when it can take up to 4 weeks just to get a passport approved by other government departments.

Your first corporate letter from the Inland Revenue is very much a meet & greet affair. They want to get to know you a little before they start coming on strong and demanding ‘returns’ later in the year. They send you a charmingly named Corporation Tax New Company Details form. It basically requests the following:

1. Are you actually trading yet? (so will you be owing them tax any time soon)
2. Who is actually directing your company? (so Companies House don’t really tell them very much after all)
3. Can you be bothered to answer these questions (and more) yourself?

The last point is important, because this is the stage where you can nominate someone else to take care of all this tax-related drudge work for you. hoorah!

The good news is that they’re not demanding the form be returned for a fair while. It must be returned three months from the beginning of the first accounting period. In laymens terms, that means that once you take money on behalf of your company, you must return the Corporation Tax New Company Details form no more than two months after the end of that month. So if I make my first transaction at any point in December, I better make sure the Revenue have my completed form by the end of February or there are some serious fines to be had.

There are also decisions to be made in regard to the dates that the official corporate accounts will be prepared for. This is an area I’m not too familiar with so I’m going to do more research and write up more when I’m better informed.

Back to bank

I’m a little surprised as to how long it is taking to actually process my banking application forms. I’ll be chasing that down at the beginning of next week. Once my account is opened and ready for business, then with any luck I’ll be able to actually start taking my own advice and get hold of an accountant.

It turns out that banks love high-tech guys. They can’t wait to shower us in “free” services and add-on products designed to make our lives easier.

The poor market trader with his stacks of cash is totally obsolete from a banking point of view. He’s paying his fees daily and there’s nothing he can do about it. However, instead of mourning the loss of cheap market goods, I’m going to focus on the positive angles for Internet start-ups.

HSBC are currently offering 18 months of free business banking to start-ups. This means you can get your corporate account set up (and ready to start buying any essential hardware & software) without paying a penny. They offer an inclusive credit card, cheque processing, online & phone access and all the usual services you’d expect from personal banking, for nothing. The only condition is that you don’t want to process a lot of over-the-counter cash payments. Awesome.

I’ve gone ahead and set up an account with them, but MY GOD, the volume of paperwork that arrived this morning was unbelievable. It’s going to take me most of the weekend just to read it.