Starting a Craft Business: Legal Structure & Setup Guide

This weeks question comes from Caroline, who wants to start her own Home Craft Business, but she isn't sure how to go about setting up and registering her Craft Business, or what legal structure she should adopt.

This is a really good question, because to get on the right footing with HMRC and other authorities, you need to make sure that your Craft Busines is set up correctly and has the right legal structure.

Starting a Craft Business Legal:

When thinking about starting and setting up your Craft Business,  you need to consider which legal structure will best suit the way you intend to do Business, as this will affect:

• The Tax & National Insurance that you pay.
• The Records that you have to keep.
• Your Financial Liability if your Craft Business runs into trouble.
• The ways that your Craft Business can raise money
• The way management decisions are made about your Craft Business.

Before starting a Craft Business, I therefore suggest that you seek some advice to determine which Business Legal Status would suit your Craft Business best, based upon your goals and objectives.

There are several legal structures to choose from, including:

• Sole Trader
• Partnership
• Limited Liability Partnership (LLP)
• Limited Liability Companies (LTD)

If you're not sure which legal structure would suit your Craft Business best, it's a good idea to get advice from an Accountant, Solicitor or seek advice from the Business Support Helpline at www.gov.uk/business-support-helpline.

This is a UK Government run Business Support Helpline, which provides invaluable Business start-up advice, including information about grants, which are sometimes available to certain groups starting a Business. 

In the majority of cases, most of my customers start their Home Craft Business as a Sole Trader, as this is usually the simplest and quickest way to start and set up a Craft Business.

Setting your Craft Business up as a Sole Trader, has the advantage that there isn't much paperwork to do and there are no registration fees to pay.  But in order to legally set yourself up as a self-employed Sole Trader, there are several things you must do.  

Check-list for Starting a Craft Business:

• Register as Self Employed with HMRC.
• Obtain any permits or planning permission that you may need from your local authority.
• Contact your local authority to find out whether you need to pay Business Rates.
• Contact HMRC to register for VAT if you expect to have a turnover which exceeds the VAT threshold. (This is currently £82,000 p/a for 2015/2016).
• Set up a financial record-keeping system
• Put your name on all of your Business stationery, including letters, invoices, receipts and cheques.

Both The Business Support Line and The Citizens Advice Bureau  provide additional information on a wide range of self employment topics and can also provide a list of other organisations to contact for specialist advice, so I would encourage you to get in touch with both of these organisations, for further help and advice.

in addition, you can find valuable resource at Victress Entrepreneurs Ltd on how to begin making money, selling crafts at home, including how to write a Business Plan and how to Start your  Business. 

Don't forget that when you register for any of my Craft Business Courses you'll receive my comprehensive Business Start Up Manual and Marketing Guides which you'll find invaluable for starting and setting up your Craft Business.  In addition, as a member of www.thekeepsakeguild.co.uk you will continue to receive on-going Business help and support, both from me and my network of around 100 Guild Members Worldwide.

So, Caroline, I hope that this has answered your question and that you have found this weeks Q & A Session helpful?

Remember, if you want weekly tips and advice on starting your own Home Craft Business, please subscribe to my Youtube Channel and you'll be notified each time a new Video is uploaded.

Don't forget, if you've got any questions at all about starting or setting up your own Home Craft Business, please leave them in the comments below and I'll do my vey best to answer you in a future video.

Starting a Craft Business can be overwhelming, start by downloading our FREE Guide here:

How to Start your own Craft Business