Operating your business 2019-10-30T13:12:21+00:00
Back to toolkit home

Now that you have incorporated a company, you have to consider the operational support you need and the administrative provisions to make in order to run a successful business.

Licence in

Following incorporation, UCLB will licence the IP to the newly formed business in exchange for either 5% of 10% fully diluted ownership in the business (“equity”) as calculated at the point the company has accumulated its first £1million in equity funding. The equity UCLB receives depends on whether the spinout has opted for the founder-driven track (5%) or the tailored-UCLB support track (10%). In case of an exclusive licence to the newly formed business, UCLB will always reserve the right for UCL and its affiliates to use the licensed IP for any (non-commercial) research and academic purposes. The terms of your licence will allow for you to develop and commercially exploit the UCL know-how, software, algorithms, datasets or a combination of them, sometimes within a restricted field of use. Any new IP developed within the company by its employees and contractors will be owned solely by the company.

Funds in: opening a bank account

Surprisingly enough, opening a bank account can become an administrative challenge for small companies and even delay investment, so make sure you start considering your options early. Without an account in place, you will not be able to receive payment from customers or investment from VCs, sometimes amounting to significant lost opportunities.

It is important to find out in good time about all the documents each bank will require for the establishment of a business account and gather everything early on. The anti-money laundering (AML) provisions that all banks now need to comply with mean that they will require at least proof of identity for all Directors, company address and incorporation details, including share structure (known as ‘KYC’ – Know Your Customer). You might also want to consider the availability of a dedicated advisor when selecting your bank as, in the long term, you might need to speak to them about loans and investment options.

Portico Ventures provides contacts for banks with programmes for start-ups, but you are free to select whichever business bank suits your spinout best.


Your business is legally responsible for bookkeeping and you will need regular reports on cash positions and the wider financial outlook to make informed decisions. A good accountant should be able to set you up with an appropriate financial system such as Xero, manage your payroll and prepare your monthly accounts and forecasts. You are legally obliged to submit annual company accounts to Companies House, which must be approved by the board of directors. Your accountant will usually prepare these for you and ensure you don’t miss the submission deadline (which will incur a fine, even if you have had nil turnover during the period).

You will need to discuss your company’s specific needs with your accountant for them to generate regular reports that are genuinely useful for managing your business and attracting investors. Do consider the need for:

  • Financial management reports and forecasts, detailing the general economic health of your business.
  • Cash flow reports and forecasts, including your “cash out” date (the date at which you are likely to run out of cash), as this can motivate the timeline of your funding rounds.
  • Details of the raw transactions.

Portico Ventures can recommend credible providers of accounting and bookkeeping services as part of its offering. Especially when setting up the structure of your system and reports, do seek the advice of an expert in this area.


Start-ups often consider tax only after incorporation, which can expose founders and the young business to tax liability. We recommend that you seek independent tax advice ideally ahead of or at least at the time of incorporation, to limit your exposure. Portico Ventures can signpost you to reliable service providers in this area, but you are free to work with whomever you choose.

There are a few tax points that you should consider with regards to your business, as described below.

1.       Company tax

As a private limited company, your spinout will have its own tax liability. You will need to register for corporation tax at incorporation and pay tax on profits every year, in line with your company tax. Most spinouts will not turn a profit in their first year, but your business will still need to keep adequate accounting records and report if it has nothing to pay by the HMRC deadlines. As your spinout moves away from tax losses towards profits, you will also need to start budgeting for future tax payments.

PAYE, NIC and VAT commitments require regular management as well, so employing an accountant is highly recommended. Portico Ventures can connect you with bookkeeping and accounting companies, or you can select your own.

2.       Income tax

You may be required to pay income tax on shares in the spinout that you acquire at a price lower than their market value (e.g. through options). Note: this does not apply to founder shares which are usually issued before the company has any market value. If you opt to contribute cash or assets to the company, you might want to ensure that these are considered payment for shares.

Specific classes of shares – such as restricted shares – may also complicate your personal tax situation. Do seek specialised tax advice before accepting restricted shares.

3.       Reward schemes

Your new company might qualify for tax reward schemes that incentivise start-ups or R&D intensive ventures, so speak to your tax advisor about any breaks that might be open for your business. Do consider:

  • Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS): These are tax break schemes enabling smaller, high-risk companies to attract investment. They aim to help your company raise money by offering tax reliefs to individual investors who buy new shares in your company.
  • R&D tax credits: This scheme allows you to reclaim your R&D expenses (up to a certain limit) as part of your annual tax filing. Expenditure on R&D needs to be demonstrated through invoices and timesheets if requested by HMRC, so ensure your records are set up from the start to allow for the recording of R&D costs. Note that it is not usually possible to claim R&D tax credits on developments that are being funded by a government grant such as an Innovate UK award.

At a personal capital gains level, you could benefit from lower tax upon disposal of shares through the Entrepreneur’s Relief scheme. The scheme allows entrepreneurs that are selling (part of) their shares in a business to pay lower tax on gains. This is an individual rather than company tax matter, so speak to your personal tax adviser to see if you qualify and what you need to do to maintain your eligibility for this relief from the point your shares are issued.

Register changes with Companies House

Whenever one or more of the following changes occur through a decision of the board, you will need to register changes with Companies House (and potentially with HMRC):

  • directors and company secretaries are added, resign or change their personal details
  • your company name changes
  • your registered office address changes
  • your accounting reference date changes
  • your ‘people with significant control’ (PSC) information changes
  • your company’s share structure changes (for example if you issue new shares)
  • your company registers or changes a charge over its assets.

The changes can be made online through a registered Companies House account. Significant changes (changing the company name, removing a director, changing the articles of association) will also need you to pass a shareholder resolution (shareholders must be asked to vote on the change; the threshold required to approve the vote will be determined by your company’s Articles of Association).


Now that your spinout has been incorporated, you will need to consider the question of facilities. Note that, at this point, your company has flown the UCL nest, so you should not expect to be given rights by your Department to use the University’s academic facilities for your spinout. More flexibility may be available for spinouts on the tailored-UCLB support track. When looking at space options, you will need to balance costs and flexibility, keeping your budget in check and the company open for rapid growth. Therefore, consider organisations that offer modular office space or that allow you to upgrade your facilities plan to match your company’s scale-up pace.

UCL is involved in multiple incubation/acceleration facilities, such as BaseKXIDEALondon, P4 Precision Medicine Accelerator. These organisations not only offer office space options for startups, but also organise training and pitching sessions that could help your spinout develop skills, grow its network and raise further funding. Should they be unable to offer space (they are often at 100% capacity), UCLB can suggest commercial alternatives for start-up spaces across London.


To protect yourself and your company against any unforeseen situations, consider taking out insurance policies. Individual insurance will protect yourself and your assets against risks you expose yourself to as part of your involvement with the day-to-day operations of your spinout. Investors might expect some form of liability insurance before product launch, protecting the company against damages caused by a faulty product for example. Speak to an insurance broker to ensure that your company and its employees are adequately covered for your particular business operations. Consider the value of:

  • Individual insurance: When you act as a director (or “shadow director”) in your company, any claims made against the directors in relation to their duties extend to you. This can affect your personal finances, as you are individually liable for your activities as a director. Do consider a comprehensive directors’ liability insurance policy that can protect your personal wealth.
  • Company insurance: As your spinout is likely to commercialise very innovative products and services that rely on new technologies, it is wise to protect the business against public and product liability, professional indemnity and material damage. As a Portico Ventures spinout, you will be required to take out insurance covering the lifetime of our licence agreement and a further six years after its end. If your company relies on a number of key individuals, consider also taking out “key man” insurance, protecting the company from the costs associated with the illness, incapacity or death of these key people. If your spinout employs people, you are legally required to have employers’ liability insurance, covering your company against claims made by employees.

Human resources

As you are starting up, you are unlikely to have a dedicated HR person in place. However, you should understand what your legal obligations and your professional requirements are under each of the points below.

  • Recruitment: Finding the right people can be time consuming and expensive, so you will need to plan when you are likely to need which skillset. For early recruitment, you could use your own networks (or our extended networks), but do consider using professionals in the longer term, as it can be more efficient and would expand the radius of your search. An offer letter needs to include details such as a start date, the salary and a mention of the fact that approval is subject to employment references.
  • Contracts: While employment contract templates abound online, do ensure that the contracts you use are tailored to the specific needs of your start-up. For example, as you are running a digital tech business, employment contracts should include non-disclosure provisions if parts of your IP cannot be formally protected, since any breach could jeopardise your product or business case. The spinout also needs to own all of the new IP generated by both employees and consultants, so make sure you get expert advice when devising and signing contracts.
  • Visas: Take into account your legal obligation to check every employee’s right to work in the UK and becoming a visa sponsor if necessary. Infringement comes with significant penalties.
  • Pensions: All British companies are legally obliged to have a workplace pension scheme, with the company paying at least 1% (3% from April 2019) of the employee’s qualifying earnings into the scheme. There are many approved off-the-shelf schemes that can be researched; alternatively, a pension adviser can not only help set up a scheme for your employees, but also advise on pension benefits.
Back to toolkit home