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If you are interested in starting a computer repair business, you must be aware of certain commercial and legal issues. You may consider this if you have a knack for fixing computers or wish to add a revenue stream to supplement your full-time job. In any event, starting a new business can initially seem like a daunting task. However, there are a few key areas you should first consider before starting a business. This article will explain these legal and commercial issues you might want to consider before starting a successful computer repair business.
1. Create a Business Plan
Almost every business will benefit from a well-considered business plan. At its most basic, a business plan forecasts the critical strategic and financial challenges in the short, medium, and long term.
When you are in the early stages of building your computer repair business, you will need to consider:
- who are your target market i.e. whether they are personal or commercial clients;
- what services will you offer;
- whether you will hire employees;
- how you will market your services; and
- what premises you intend to operate your business out of.
2. Pay Close Attention to Your Financial Plan
A financial plan forms part of your business plan. This portion summarises critical financial metrics, including:
- upfront expenses;
- fixed and variable costs;
- cash generation; and
- financing plans.
You should give due consideration to your projected startup costs. This is because your ability to pay off your initial costs will determine whether your business is successful in the short term.
For a computer repair business, some upfront expenses particular to the industry include:
- repair tools and workplace expenses;
- computers, monitors, and hardware drivers; and
- an inventory of repair parts such as CPUs, fans, batteries, hard drives, and memory sticks.
You should also consider hiring a solicitor to draft your commercial contracts. After all, computer repairs involve a high risk that your customers’ data may be lost or corrupted.
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3. Choose a Business Structure
A business structure refers to the legal framework your business will operate under. The four most common business structures for all small businesses in England are:
- sole-traders;
- unincorporated partnerships;
- limited companies; and
- limited liability partnerships (LLPs).
As a business founder, you should familiarise yourself with the implications of trading through an unincorporated business structure (like a sole trader or partnership) instead of an incorporated one (like a limited liability company).
The main benefit of an incorporated company is that you tend to benefit from the legal principle of limited liability, which means that your business’ assets and liabilities are separate from yours. However, the downside to trading through incorporated structures is that they require more administration and management. If this distinction is not clear, consider the following example.
4. Consider Insurance
There is not always a legal requirement to obtain insurance, but all businesses should consider obtaining insurance. From a commercial perspective, you may find that other businesses may not do business with your business if you do not have insurance.
A comprehensive policy for a successful computer repair business will likely include:
- public liability coverage;
- products liability coverage; and
- financial loss.
5. Be Aware of Your Tax Liability
Your business’ tax liability depends on the business structure you trade through and your income and expenses. Therefore, you should consult an accountant or tax professional to ensure you comply with your obligations and maximise any credits and tax benefit your computer repair business may be eligible for.
Key Takeaways
As with any new business, you should have a well-considered business plan in place. You should pay special attention to the financial portion of your plan. Furthermore, you should consider what business structure suits your business, as well as what insurance policy will effectively cover your business. If you need help with your start-up business, our experienced startup lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
The most likely risks you face as a computer repair business owner is damaging your customers’ equipment and causing them financial loss.
By incorporating your business, you can mitigate risks associated with operating a computer repair business owner. This way, you can benefit from limited liability.
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