Key Aspects of Starting a Business - Essay Example

Name: Course: Tutor: Institution: Date: Task 1.1: Legal Aspects Legal Implications The proposed venture will be a sole trader venture printing a weekly lifestyle and fashion magazine in Yorkshire, with limited liability on my private properties and assets. Through the adoption of the limited liability status, the venture will acquire its own independent status and legal standing different and apart from my individual identity. As such, this will have a series of implications. On one hand, I will have to employ a qualified management staff headed by a CEO tasked with the strategic management of the business. I will serve as the venture chairperson to ensure that the management decisions are in line with my strategic plan for the venture. On the other hand, the development of the organizational limited liability status will enable the venture to acquire its own legal status and assets consequently acquiring the legal liability to sue and be sued in the Yorkshire county and England courts of law. To this end, in the event that the venture fails to meet its financial obligations in the market to the creditors and ends up liquidating, the creditors can only attach the organizational assets and not my individual assets. Finally, the starting up of a limited liability company implies that the gains and profits will be on the sole trader. Legal Obligations Upon the establishment and setting up of a limited liability venture, the organisation will be faced with a series of legal and laws guiding its operations. One of the basic legal requirements will be the preparation and public announcement on the organizational financial statements. As such, statements such as the organizational profit and loss account, the cash flow statement and the balance sheet will be a mandatory preparation requirement. Moreover, in order to allow for a fair and transparent auditing process, the venture will be required to maintain the petty cash book as well as respective ledger accounts for all the countered business experiences. Besides, the venture will be required to acquire a compulsory insurance covering the employees and the consumers. In this regard, the insurance policy would cover the security and safety of the organizational employees while on duty, as well as the safety of the produced products on the health of its consumers. On the other hand, the law requires on a voluntary and non-compulsory basis that limited liability companies acquire a property insurance policy allowing for a compensation of property in the vent of theft of property destruction. In addition, further to the payment of taxes on the overall organizational profits acquired as per under the taxation laws in the UK, the venture will be exposed to the Yorkshire value added tax (VAT) that is a percentage reviewed on a regular basis whose value is added onto the producer selling price for every unit sold in the market. In addition, other legal frameworks and regulations likely to implicate on the proposed business will include the consumer protection act that safeguards against products overpricing and quality and the weight and measurements Act that guarantee on the adherence of the set weights and product value measurements prior to supplying them into the Yorkshire and England markets respectively. Task 1.2: Financial Aspects Budgeting Rationale In the setting up of the venture, it is imperative that the management develops a survival budget. In this regard, the survival budget will be crucial and of increased relevance in ensuring that the proposed venture acquires the required infrastructure and meets all its costs and expenses in the period prior to its profit generation. As such, the generation of a proper and accurate survival budget would ensure the proposed venture resilience and success over the no profit income period. Finance Sources On one hand, key among the proposed venture sources of finance for a company as Pagell and Halperin (21) stated would include the respective shareholder’s contribution, that will form the equity and venture start up capital. Moreover, the venture has the opportunity of acquiring its additional capital funds from financial institutions such as banks through a loan extension scheme. Similarly, the venture could acquire increased financial support from its suppliers by acquiring products on credit to increase its production capacity. In this case, suppliers, support through credit advances, though not a direct financing approach, serves as an ultimate indirect financing approach enhancing increased business production and efficiency, as well as the enhancement of the organizational supply chain relationships. Expected Start-up Costs Based on the start up capital of $10, 000, the proposed venture estimated equipments such as the printing machines as well as paper acquisitions costs are estimated to be half the start up capital in the range of $5,000. On the other hand, the cost of hiring staff is estimated at $3,000 for the first year period, with a miscellaneous of insurance, registration among other indirect cost estimated at $1,000. Moreover, the proposed venture start up budget intends to retain a $1,000 budget as the precautionary amounts for covering on any unforeseen expenses or allocated budget deficits within the first operational year. Financial Statements Rationale In order to ensure financial management prudence, the venture will require a pricing policy to guide and regulate its pricing approach as a guarantee for the acquisition of a given profit margin on each sold product. Moreover, the venture should develop a break even analysis as a tool for evaluating the level at which the invested funds are accrued back and the venture earns profit for a proper dividend determination strategy. Similarly, a profit and loss account of the venture enables evaluate annual gains comparing them with preceding years as well as determining the earnings per share to extend to the shareholders. An additionally relevant financial account is the cash flow statement that enables an organization plan for both its short and long term investments to avoid insolvency where a venture fails to meet its short term obligations. Finally, a balance sheet serves as a road map through which an organization, financial position is evaluated and compared with the past to develop strategic future improvement decisions. Task 1.3 Legal/Financial Aspect Impact on Business Systems and Actions Taken Ownership (Limited Liability status) This will implicate on the business because the venture will be a separate legal entity I will need to Search and register the business name Follow the Companies Act 2005 Record keeping The transparency of the Company will be based on the concept of proper record keeping I will need to Employ record keeping experts Review the records on an annual, quarterly basis Finance the record keeping function to increase its efficiency. Employee Insurance This will affect the company because it will be fully mandated with insuring all the employees I will need to Establish the existing insurance covers Evaluate the ideal for the organizational needs Calculate per employee policy costs Profit earnings, annual taxation This will implicate on the profit margins realized and the value of earnings per share hence announced I will need to Establish the taxation rates and deduct them from the organizational earnings. Value added tax This will implicate on the actual selling price as it will be added to the desired selling value I will need to Establish the taxation rates Add the value to the desired profit margin to develop the right price Consumer protection Act This will influence on the quality and safety of the I will need to Establish the required product standards Align the system with the standards Personal survival budget This will influence the success rate and the ability to meet the budget needs I will need to Evaluate probable costs Develop a budget based on the existing potential revenue Potential Costs This will directly influence on the organizational profitability and start up capital needs I will need to Conduct a market research on the average equipments costs Request supplies for catalogues and quotations Select from the most economically viable Finance sources This has a direct implication on the business ability to meet its financial needs and operating costs I will need to Establish the finances required’ Establish viable sources Use the company structure to access the sources Pricing policy This has a direct implication on the organizational profitability margins I will need to Evaluate the cost of production Determine the desires profit margin Break-even analysis This has a direct implication on the organizational credit worthiness from the expected financial sources I will need to Evaluate the expected costs Evaluate expected revenues Determine when revenues will equal the costs Balance sheet Demonstrates the organizational, financial performance and aid in strategic decision making I will need to Prepare an annual balance sheet Base organizational decisions on the balance sheet Cash flow statement Will serve as an illustration of the venture to meet its short and long term liabilities thus promoting its credit worthiness I will need to Prepare monthly cash flows Present the statements when seeking credit Ensure a cash inflow surplus always Works Cited Pagell, Ruth A, and Michael Halperin. International Business Information: How to Find It, How to Use It. New York: AMACOM, 1999. Print. Read More