Our top tips to help you set up your new business
Today we guide you through the exciting but scary world of setting up your own business. From choosing a business structure which will work for you to book keeping and how to pay your tax bill, we cover it all!
Are you thinking about starting a new 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:
1. 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.
2. 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. Finding it confusing? No problem, we would be happy to assist you navigate your annual Self-Assessment and tax return.
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 we strongly advise that you keep your business and personal finances separate as it simplifies your bookkeeping and tax reporting.
4. 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. We can help you with your bookkeeping, just visit our website.
5. 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 and ask us for a copy of our New Business Kit? 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.
Base rate cut to 4.5%
The Bank of England reduced their base rate to 4.5% last week, as had been widely expected in the days leading up to the decision.
The decision was made by a 7-2 majority. The minority of two members were looking for the rate to be reduced to 4.25%.
In announcing their decision, the Monetary Policy Committee (MPC) outlined their thoughts on the economy. Here are some highlights.
Inflation forecasts
The Consumer Price Index (CPI) was 2.5% for the last quarter of 2024. The Bank expects CPI inflation to increase to 3.7% by autumn 2025 due to higher global energy costs and regulated price changes.
However, the MPC also feel that pressures on inflation at a domestic level are moderating and will wane further as 2025 progresses. So, they expect CPI inflation to fall back to 2% from the end of 2025.
Growth forecasts
The Bank expects GDP growth to pick up from the middle of this year. They believe that the economy’s ability to produce goods and services has grown more slowly than previously estimated. So, while they’ve noted a slowdown in demand, they judge that only a small amount of unused capacity has been created in the economy.
These and other factors led the MPC to reduce the rate to 4.5%.
Will there be future rate cuts?
Looking forward to future potential rate cuts, the MPC has said “a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate.” They stressed that there are ongoing uncertainties around demand and supply in the economy.
The MPC also highlighted the global economic uncertainty and a pickup in financial market volatility due to the recent announcements in the US on trade tariffs and subsequent retaliatory measures. This is something they continue to monitor.
To review the Monetary Policy Summary in full, see: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/february-2025