Here at Rogers Spencer, we see many new business start-ups. It is very important that when starting a new business, you understand the various options and requirements from the outset. This can be a little overwhelming at first, but don’t worry, we’re here to assist!
We have listed below the key steps and considerations to get your business set up and ready to trade:
1. Choose Your Legal Structure
Don’t rush this. Your choice dictates your personal liability and how much tax you’ll pay. You have various options, most commonly:
Sole Trader Simple to set up and less admin. However, you are the business; if it owes money, you owe money personally. Tax rates can often be lower than in corporate structures.
Limited Company: A separate legal entity. It offers “limited liability” (protecting your personal assets) and can be more tax-efficient overall once profits reach certain levels, when planned correctly, though it comes with stricter regulation and filing requirements at Companies House.
Partnership: Can be ideal if you’re starting with others but requires a robust Partnership Agreement to prevent future disputes.
2. Register with the Authorities
HMRC: You must notify HMRC that you are trading. Sole traders register for Self-Assessment; limited companies register for Corporation Tax.
Companies House: Only required for Limited Companies and LLPs.
VAT: You must register if your taxable turnover exceeds £90,000 (2024/25 threshold). You can register voluntarily if your customers are VAT-registered businesses, allowing you to reclaim VAT on your expenses.
3. Separate Your Finances
Never use your personal bank account for business.
- Open a dedicated Business Bank Account immediately. It makes bookkeeping cleaner and is a legal requirement for limited companies.
- Set up a “Tax Pot.” A good rule of thumb is to move 25–30% of every invoice into a separate savings account so you aren’t scrambled when your tax bill arrives.
4. Plan your Record Keeping
Paper ledgers are a thing of the past. Under MTD rules, most businesses must now keep digital records.
- Which accounting software will work best you and your business? Who will process the bookkeeping?
- Automation: Which systems and apps can help you save the most time and improve the accuracy of your records. Can the system that you are using give you quick and easy access to the current financial performance of the business
5. Understand Your Deadlines
Missing a deadline results in automatic, non-negotiable penalties.
- Sole Traders: Tax return and payment due by 31st January in the year following your first accounting period (will be up to 5th April from the date that you commenced trade).
- Limited Companies: Accounts due to be filed 9 months after year-end; Corporation Tax due to be paid 9 months and 1 day after year-end.
- Payroll: If you have employees (even just yourself), you must run PAYE and submit RTI (Real Time Information) every time you pay a salary. You will also need to provide a workplace pension option for your employees.
And Finally… Choose a Good Accountant!
A good accountant can help you with all of the steps above and can provide you with the re-assurance that you are set up in the way that best suits you and your business, allowing you to concentrate on what you do best!
Don’t wait until the end of the financial year to speak to an accountant. A 30-minute proactive chat in month one can save you thousands in “accidental” tax liabilities in month twelve and can make sure you and your business is fully compliant with all of the above regulation.
Looking for that handy accountant? Look no further – Rogers Spencer are here and ready to help. Get in touch today!
📞0115 960 8412
📧advice@rogers-spencer.co.uk
Robin Maxwell
Robin MaxwellRobin Maxwell is a partner of Rogers Spencer and has been working with us since 2003. Robin specialises in Accountancy Solutions, Audits and Tax and VAT. Find out more about Robin here.