Starting a new business? What you need to know

If you’re preparing to start your new venture, there are steps you need to take to make your launch as smooth as possible and comply with commercial law.  

Planning ahead can help you avoid contravening important regulations and minimise your financial liabilities – protecting your cash reserves for future investment in your business! 

Here’s everything you need to know before starting your business, from tax planning to filing with Companies House. 

Choosing a company structure 

The legal structure of your company will impact the rest of your financial planning, so it’s important that you make this decision early.  

There are several factors to consider when choosing a company structure, including: 

You could operate as: 

You might also consider a limited liability partnership (LLP), in which partners are limited in liability to the capital they have invested.  

You can adopt a different business structure further down the line if your commercial needs change.  

For example, a sole trader may decide to incorporate as their business grows and they want to transfer risk to a separate legal entity. 

Tax planning 

There are typically two ways to pay tax as a business owner, depending on whether you have incorporated or not.  

As a partner or sole trader, profit from your business is considered personal income, meaning you need to report it via Self-Assessment and pay National Insurance and Income Tax through your online account with HM Revenue & Customs (HMRC). 

Directors of limited companies are generally salaried, meaning tax is paid through PAYE. You may need to report dividend income via Self-Assessment.  

Additionally, the business itself will be subject to Corporation Tax at the rate of: 

You will also need to register and pay VAT if you exceed a taxable turnover of £90,000 or more per 12-month period.  

To minimise tax liabilities, you’ll need to plan around considerations such as allowable expenses or deductible expenditure, such as staff costs or plant and machinery (e.g. office equipment). 

Accounting requirements 

When starting a business, it’s important to remember that you’ll need to keep records of all transactions, including expenses and outgoing and incoming invoices.  

These will be used to determine your taxable income/profits. 

You’ll need to report this via your Company Tax Return or Self-Assessment, whichever is applicable to your company type.  

Depending on the complexity of your operation, you may need to consider integrating accountancy software into your accounts procedures.  

Accessing finance 

Many business owners need to access capital to fund their new business.  

Depending on your business type, there are several funding options available to you, including: 

You’ll need to plan around tax liabilities when accepting new funding and pay careful attention to reporting requirements and profit-sharing agreements.  

Seeking advice 

Starting a business doesn’t need to be complicated, but you are better off obtaining expert advice on how to proceed.  

We can guide you through choosing a company structure based on short and long-term plans, support you with tax planning and advise you on accounting and filing requirements.  

This will make sure that your business gets off to a flying start without financial roadblocks! 

Get in touch with a member of our team to discuss your options and needs.