Starting a business?

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17th February 2025 Posted by -

Starting a business?

Starting a business in the UK is an exciting venture, but it comes with financial, tax, and accounting responsibilities that you must navigate effectively. Understanding what you will need to do from the outset will help make sure that you don’t miss anything, avoid unnecessary costs, and position your new business for success. Here are some key areas to focus on;

Choosing the Right Business Structure

One of the first decisions you need to make is selecting which is the right legal structure for your business. 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 it pays to take enough time to make sure you make the best choice for you.

Registering with HMRC and paying tax

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

Considering tax is critical to business planning and no one wants to pay too much! Key taxes include;

  • Income tax
  • Corporation tax
  • VAT, and
  • PAYE and national insurance.

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 we strongly advise that you keep your business and personal finances separate as it simplifies your bookkeeping and tax reporting.

Bookkeeping and claiming expenses

Keeping accurate financial records will be crucial for you in managing your business and staying compliant with tax rules. This means considering whether you should invest in using accounting software and how you will make sure you keep records of your income, expenses and invoices for the time period that HMRC require.

You will be able to reduce your taxable profits by claiming allowable business expenses. These may 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 costs.

It’s essential that you keep receipts and documentation to support any claims.

Planning for growth

Growing your business will likely take good planning and funding.

Financial forecasting and budgeting can help you keep your finger on the main financial drivers for your business so that you can grow your business effectively and sustainably.

There are many potential funding options that could help you expand your business. Bank loans, grants, and venture capital should all be assessed.

If you would like assistance with your new business venture, why not give us a call we can help you make sense of all your financial, tax and accounting needs. We will be happy to help you lay a strong foundation for your business so you can focus on its growth.

Click here to contact us or call 01283 743851