Starting an online business to sell is a good lifestyle choice but there are some considerations to consider. One of the most important ones you will ever make is in deciding your brand name.
The brand name is one of the most important decisions you will have to make in the life of your business. The company name will identify your business for the foreseeable future. It is possible to change your company name, but doing so could have major implications – particularly as your business becomes more established. You will have to go through a re-branding process which could be costly; you may have to create a new logo, brand and colour scheme as well as printed materials, website re-design and any intangible costs such as the confusion it might cause amongst your customers.
Therefore it is really critical to get it right at an early stage.
There are three main options when it comes to deciding on a company name. Firstly, you could use your own name as your company name. This is absolutely fine, but it may be tougher to present yourself professionally as a brand. This does however work well for Authors, Freelancers, Sole Traders or Professional Speakers, where it is about the person.
You could choose to name your company based around your products or services; ABC Plumbing and Heating, for example, which describes what it does but isn’t necessarily creative. However, this sort of company name may help in search engine rankings because it has your main product or service within it.
The final approach is all about building a brand so it stands on its own two feet. Major companies these days are all about brand identity: Google, Apple, BMW, Audi, Yahoo!, Samsung, Coca Cola, Visa, Starbucks, Adidas, McDonalds and so on. They are all brands that people readily recognise; the idea being that once people remember your unique brand name you will be found in the search engines, and if it’s catchy it will stick in people’s minds.
Think about how your company name will look, maybe as a part of a logo or on your website. It shouldn’t be too long and may have a bearing on what usernames you use for marketing your business on social media platforms. You will also be registering a domain name, setting up a website and having emails linked to the domain in due course, so picking a company name that can be reflected in your website domain name will also help. You can double check both of these by:
Googling your chosen company name(s) to see if anyone is already trading using those names
Checking with a domain registrar, such as Fasthosts, to see if your preferred domain name is available
It goes without saying that it needs to be unique. You can check if your chosen name or something similar has been registered with Companies House or Intellectual Property Office in the UK; or in the US, the Patent and Trademark’s Office.
Consider how it will be perceived by your potential customers. It might be a great idea or quite funny at the time to give your company a catchy or clichéd name, however, you need to consider if, in a few months, it will continue to appeal to potential new clients.
You may choose to operate as a Sole Trader, Limited Company or Partnership when starting out.
Registering as a Limited Company is my recommended route as it is a simple process and protects the Intellectual Property surrounding your company name. In the UK, the process of registering a Limited Company is straightforward. There are three options:
Find a reputable Chartered Accountant and ask them to register your new company on your behalf
Use one of the many Business Registration websites available
Do it yourself on the Companies House website – http://www.companieshouse.gov.uk
Registering the business directly through Companies House is probably the cheapest. However, an accountant will have experience in registering businesses and will understand what share structure you will need to set up from day one.
Do check on Companies House to see if a company name already exists. Equally, someone may have registered your chosen name as a Trademark, which means you can’t use it as your company name.
You can search registered trademarks on the Intellectual Property Office’s website – http://www.ipo.gov.uk/
Using one of the third party websites to register a business also makes life slightly easier than the DIY option however, from personal experience, they make the process more complicated.
They register the business on your behalf with themselves as the key shareholders and then transfer the shares into the name(s) of your company director(s). Director Shareholdings are recorded permanently and if, like me, you have OCD, it looks a bit messy on the paperwork.
When registering a company in the UK, you only need one Director and a Company Secretary, who can be the same person.
Once registered you will get a Registered Company Number, and will be legally obliged to complete annual Company and Tax Returns on an annual basis. A good Chartered Accountant may charge in the region of £500 per year to complete the various returns but they will ensure these returns are accurate and hopefully save you enough tax (to cover their costs at least).
You may also want to become VAT registered; HMRC adjust the UK VAT threshold each year so check what that threshold is on the HRMC website, you can still be VAT registered if your turnover is less than the UK VAT threshold.
Once registered you have to charge VAT to your customers and complete quarterly VAT returns but you can also claim back any VAT on your outgoings. If your business does not have many overheads and is under the threshold then you may want to avoid being VAT registered, likewise if you are selling directly to consumers (B2C) then not being VAT registered will save your customers 20%. However, if you do have higher overheads, and are selling your products or services to businesses (B2B) then you may want to consider VAT registration regardless of whether you have reached the threshold.
Choose a company name which you will like in five years’ time
Decide whether you are the brand or whether your business will be the brand
Register your company name officially
Consider registering for VAT; having a registered company and VAT registration does look professional
Choose and register your domain name.
Secure your Social Media ‘handles’ at the same time