How to . . . start a small business The UK has been voted one of the best countries in the world to set up a new business. Education, a competitive company tax system and a broadly supportive business environment put the UK ahead of Germany and France when it comes to small enterprise, according to EY, the professional services group. Despite these advantages, the number of start-ups in the UK lags behind the rest of Europe. In the five years to 2011 active enterprises rose by just 0.7 per cent, compared with 1.4 per cent across the rest of the EU and a staggering 9.9 per cent in Hong Kong, according to accountancy firm RSM. The government says that it wants to celebrate British enterprise and support more aspiring businesses owners to create more jobs and boost the wider economy, which means that although credit may still be tight on the high street there is help and funding available if you know where to look. FT Money looks at the key things that every budding entrepreneur should consider when starting a business from their kitchen table. Look for local support There is a dizzying amount of information for prospective business owners on the internet, but Emma Jones, author of Spare Room Start Up - How to Start a Business from Home says that it's a good idea to start local and look for support groups you can talk to in your area. The National Enterprise Network is a membership group for organisations that support and develop enterprises and can provide impartial advice to new businesses and can tell you who works in your town. Local councils offer a range of different services for businesses, including grants and free advice and The Federation of Small Businesses (FSB), Forum of Private Business (FPB) and Chambers of Commerce also have details about support networks in different locations. With bank loans hard to obtain, many entrepreneurs are turning to savings or loans from friends and family. But funding may also be available from organisations such as the Prince's Trust and Fredericks Foundation, both of which are aimed at young people. The government's enterprise allowance also provides money to people on benefits who want to start their own business. Decide what sort of business you want Sole traders own and run their businesses alone, partnerships run a business with other people and a limited company allows you to separate your personal income and business income when paying tax. Being a sole trader is the easiest way to start a business - all you need is a national insurance number and you can register with HMRC. However, if you have a limited company your personal assets will be protected if the business runs into financial difficulties and you can keep profits and distribute them as dividends in the future if you choose. The Federation of Small Business has more details about the pros and cons of each type of business. Consider insurance If you are working from home, be aware that your existing home insurance is probably only designed to protect your personal belongings. If you do not tell your insurer that you are running a business from home then you may find your insurance is invalid. Start-ups that employ at least one member of staff are also required by law to take out employer's liability insurance, and if you have customers or clients coming into your home you will need public liability cover. The Association of British Insurers explains the rules relating to personal and business insurance and you can find a list of insurers in the UK from the British Insurance Brokers" Association. Set up a business bank account If you have set up as a limited company or partnership, you are required to have a business bank account. Sole traders can choose to use their personal current account but keeping your businesses account separate from your personal account is a simple way to keep track of cash flow and tax liabilities. Business bank accounts tend only to offer cheque books and paying-in books but some have free overdrafts. The Start-Up Business Account from RBS and NatWest offers a £500 fee-free overdraft. Lloyds offers support from a relationship manager while Santander has a start-up account for a year for businesses with an annual turnover below £250,000 that provides 0.25 per cent interest on credit. Comparison sites such as Moneysupermarket have details of business accounts available from the UK's largest banks. Don't forget tax If you are self-employed or a sole trader you are responsible for paying your own tax and Class 2 or 4 national insurance on your profits if you make more than £5,595 a year. If your profits exceed £1,000 a year you'll need to make payments "on account" - pay half of your tax bill in January and the other half in July, based on last year's bill. You'll also need to keep business records so you can fill in a self-assessment tax return and you might need to register for VAT if your turnover is more than £77,000 a year. To receive a salary, expenses or benefits from your limited company you must register as an employer with HM Revenue & Customs (HMRC). If you think you'll need an accountant to help you there are lists of professionals in your area on the website of the Institute for Chartered Accountants in England & Wales. The FT is not responsible for the content of external websites