Setting Up, Running and Funding your Business in the UK

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  • 1. UK as Europes innovation hubSetting up, running and funding your business14 July 2012

2. Table of Contents1. Setting up your business Tech Clusters Advantages offered by the UK Legal issues2. Running your business Digital media Sales and marketing analysis Legal issues3. Funding your business Company valuation Financial considerations Legal issues Fundraising strategy Investment incentives: SEIS, EIS Gearing up for Venture Capital [2] 3. Tech clustersAdvantages offered by the UKLegal issuesSETTING UP YOUR BUSINESS [3] 4. Setting up your businessTech clusters London Tech City (Silicon Roundabout) Mind Candy (Moshi Monsters) Tweetdeck Last.fm Silicon Fen (world class tech-hub in Cambridge) ARM ($7 billion valuation) Advanced RISC Machines Silicon Glen (tech hub in Scotland) Rockstar North (creators of GTA) Bristol ICERA[4] 5. Setting up your businessAdvantages offered by the UK The small business rate relief New immigration routes for entrepreneursTier 1 Entrepreneur visa Applicant must either have access to 200,000 or to 50,000 + Conditions Tier 1 Graduate Entrepreneur visa Does not apply if applicant is outside UK at time of application Small businesses get capital gains tax breaks for their first10m of profit R&D tax credits of up to 200 per cent (increasing to 225 percent in 2012) Access to UK Trade & Investments export services [5] 6. Setting up your businessLegal issues (1) Intellectual property e.g. patents, copyright, trademarks anddesign rights IPR exploitation as a revenue stream Contracts and other agreements Legal structures for enterprise in UK Unincorporated association Limited Company Limited Liability Partnership Community Interest Company[6] 7. Digital mediaSales and media analysisLegal issuesRUNNING YOUR BUSINESS [7] 8. Running your businessDigital media Search engine optimisation Mobile and Social media: Online reputation management Viral Marketing [8] 9. Running your businessSales and marketing analysis Sales funnel The buying cycle: AIDA 4Ps: Product, Price, Place and Promotion Competition and risk analysis: SWOT & PESTLE [9] 10. Running your businessLegal issues (1) Taxation Corporation Tax Capital Gains Tax National Insurance Income TaxVAT [ 10 ] 11. Running your businessLegal issues (2) Corporation Tax Rate 2012 values Small profits rate 20% Small profits can be claimed by qualifying 300,000 companies with profits at a rate not exceeding Marginal relief lower limit300,000 Marginal relief upper limit1,500,000 Standard fraction1/80 Main rate of corporation tax 25% Special rate for unit trusts and open-ended20% investment companies[ 11 ] 12. Running your businessLegal issues (3) Capital Gains Tax Rate2012 values Rates for individuals 18% / 28% Rates for trustess and personal representatives 28% Annual exempt amount for individuals and10,600 personal representatives Annual exempt amount for most trustees5,300 Rate on gains subject to Entrepreneurs Relief10% Capital Gains Entrepreneurs Relief 2011-2012 values Entrepreneurs relief lifetime limit of gains10,000,000[ 12 ] 13. Running your businessLegal issues (4) National insurance contributions (1) Employee and employer rates and thresholds 2012 values per week unless stated Lower Earning Limits for class 1 NICs102.00 Upper Earnings Limits for Employees Class 1 817.00 NICs Upper Accrual Point770.00 Primary Threshold139.00 Secondary Threshold136.00 Employees (Primary) Class 1 contribution rates2012 values 2011 2012 weekly earnings from 139.01-817.00 12% 2011 2012 weekly earnings above 817.002%[ 13 ] 14. Running your businessLegal issues (5) National insurance contributions (2) Employees contracted out rebate 2012 values For both salary-related (COSR) and money 1.6% purchase (COMP) schemes between LEL & UAP Married womens (primary) Class 1 contribution 2012 values rates 2011 2012 weekly earnings from 139.01-817.00 5.85% 2011 2012 weekly earnings above 817.002% Employers (secondary) Class 1 contribution2012 values rates 2011 2012 weekly earnings from 136.00 13.8%[ 14 ] 15. Running your businessLegal issues (6) National insurance contributions (3) Employers contracted out rebate2012 values Employers contracted out rebate salary related 3.7% schemes (COSR) between LEL and UAP Employers contracted out rebate money1.4% purchase schemes (COSR) between LEL and UAP [ 15 ] 16. Running your businessLegal issues (7) Income tax Income tax bandIncome tax rate on Income tax rate on Income tax rate onnon-savings income savingsdividends 0 - 2,560Not available10%Not applicable see Starting rate forbasic rate band savings 0 - 35,000 20%20%10% Basic rate 35,001 - 150,000 40%40%32.5% Higher rate Over 150,00050%50%42.5% Additional rate [ 16 ] 17. Running your businessLegal issues (8) VAT (1) CategoryVAT rate Exempt supplies: education, finance, insurance, 0% and the services of doctors and dentists Food (but not restaurant or takeaway meals),0% childrens shoes and clothing, prescriptions, books and newspapers, new house sales and prescriptions Reduced rate: includes fuel and power used in 5% homes and by charities Standard rate: goods not falling in the above 20%Paid quarterly if annual turnover exceeds 73,000Can be claimed back on some goods/services e.g. office supplies, vehicle servicing, fuel[ 17 ] 18. Running your businessLegal issues (9) VAT (2) Optional flat rate schemeAllows businesses with up to 187,500 turnover to make a flat-rate calculation for VAT payments based on turnover, rather than having to record the VAT of every sale and purchaseThe flat rate varies by sector e.g.2% for retailing food, confectionery, tobacco, newspapers or childrens clothing11.5% for labour-only building or construction services, Computer and IT consultancy or data processing, lawyer or legal services, computer repair services, management consultancy, lawyers & legal services[ 18 ] 19. Company valuationFinancial considerationsLegal issuesFundraising strategyInvestment incentives: SEIS, EISGearing up for venture capitalFUNDING YOUR BUSINESS [ 19 ] 20. Funding your businessCompany valuation What is my company worth? Equity: how much should I give away? Capital injections: how do they affect my companyvaluation? What do investors look for?[ 20 ] 21. Funding your businessFinancial considerations (1) Sources of finance (debt and equity): 3 Fs: Family, Friends, Fools Banks, Angels and VCs Crowd Funding: crowdcube Incubators : Google Campus, Imperial Innovations, Springboard,The Difference Engine, Techhub, General Assembly Government Agencies: Technology Strategy Board, KTP Financial instruments that need to be understood Forecasts and accounting Exit Routes i.e. the Investors Perspective e.g. MBO, IPO, Sale[ 21 ] 22. Funding your businessFundraising strategy Proof of Concept/Market Structure the team Choose Investment Strategy Investment Documents Negotiation Transaction [ 23 ] 23. Funding your businessInvestment incentives Seed Enterprise Investment Scheme (SEIS) 50% Income Tax relief on 100,000 limit Capital Gains Tax exemption upon share sale Balance sheet gross assets 200,000 Enterprise Investment Scheme (EIS) 30% Income Tax relief on 1m limit Capital Gains Tax exemption upon share sale Balance sheet gross assets 15m before & 16m after investment[ 24 ] 24. Funding your businessGearing up for venture capital Golden rules and common misconceptions The investment process including key points and time scales Deal structuring: entrepreneur/investors point of view Post-investment focus[ 25 ] 25. Summary Services offered to entrepreneurs by AmooInvestment readinessFinancial controlManagement consultingIP-Skim Events organised or sponsored by AmooAmoo Booster SeriesMeet VCs, Patent Attorneys and fellow entrepreneursplace4BRICsHolds events with Amoo to explore topical themes within the start-up community [ 26 ] 26. Managing Director Nzube UfodikeInvestment DirectorAlexey Buditskiy Supported byAmoo Venture Capital Advisory Suite 84, 77 Beak Street London W1F 9DB +44 7 830 143 489 www.amoo.co.uk contact@amoo.co.ukwww.twitter.com/amootweets[ 27 ]