Starting a business in the UK is an exciting venture, but it also comes with a range of financial, tax, and accounting responsibilities that need to be managed effectively. Understanding what needs to be done from the start will help ensure you don’t miss anything, avoid unnecessary costs, and position your new business for long-term success.

Here are some key areas to focus on:

1. Choosing the Right Business Structure
One of the first steps in setting up your business is choosing the right legal structure. The three main options in the UK are:
• Sole Trader – Simple to set up, but comes with unlimited personal liability.
• Limited Company – Offers limited liability protection but involves more administrative work.
• Partnership – Suitable for businesses with multiple owners, but requires a clear agreement on profit sharing and responsibilities.

Each structure has different tax and legal implications, so take the time to make the best choice for your business.

2. Registering with HMRC and Paying Tax
All businesses must register with HM Revenue & Customs (HMRC). Sole traders and partnerships must register for Self Assessment, while limited companies need to be registered with Companies House and will have additional tax obligations, including Corporation Tax.

Tax considerations are crucial for business planning, and nobody wants to overpay! Key taxes include Income Tax, Corporation Tax, VAT, PAYE, and National Insurance.

3. Setting Up a Business Bank Account
For limited companies, having a separate business bank account is a legal requirement.
Sole traders are not required to have a separate account, but it’s highly recommended to keep your business and personal finances separate, as this makes bookkeeping and tax reporting much simpler.

4. Bookkeeping and Claiming Expenses
Maintaining accurate financial records is essential for managing your business and staying compliant with tax rules. Consider investing in accounting software and ensure you keep records of income, expenses, and invoices for the required time period set by HMRC.

You can reduce your taxable profits by claiming allowable business expenses, which could include office costs (e.g., rent, utilities, equipment); travel expenses (e.g., fuel, train fares, accommodation); staff wages and subcontractor costs; and marketing and advertising expenses.

It’s crucial to keep receipts and supporting documentation for any claims.

5. Planning for Growth
Growing your business will require careful planning and potential funding.
Financial forecasting and budgeting can help you track key financial drivers so that you can grow your business effectively and sustainably.

There are various funding options available to help you expand your business, including bank loans, grants, and venture capital. All should be carefully considered.

If you need assistance with your new business venture, why not give us a call and ask for a copy of our New Business Kit? We can help you navigate your financial, tax, and accounting needs. We’re happy to help you lay a strong foundation for your business, so you can focus on its growth.