Business start-up
Starting a Business: An Accountant's Checklist
Starting a business is exciting and, in the first few weeks, genuinely overwhelming. Almost every expensive mistake we see later traces back to something skipped in the first month. This is the order we take new clients through setup, so nothing important gets missed.
· 7 min read
1. Choose the right structure
Sole trader, partnership and limited company each carry different tax, liability and reporting consequences, and switching later is possible but rarely free. The right answer depends on expected profit, the risk profile of what you do, whether you need external investment and how you intend to take money out.
Sole trader
Simplest to run: register for self assessment, keep records, file one return a year. You and the business are legally the same, so you carry personal liability for its debts. Profits are taxed as income whether you withdraw them or not.
Limited company
A separate legal entity with limited liability and generally more efficient profit extraction once profits reach a reasonable level, through a mix of salary and dividends. The trade-off is more administration: statutory accounts, a corporation tax return, a confirmation statement and public filings at Companies House.
Partnership and LLP
Suitable where two or more people go into business together. A written partnership agreement covering profit shares, decision making and what happens if someone leaves is essential. The default statutory position is rarely what anyone actually wants.
2. Register with Companies House and HMRC
If you are incorporating, company formation comes first: name, registered office, directors, shareholders and share structure. Get the share structure right at the outset, particularly if more than one person is involved, because changing it later has tax consequences.
Then the registrations. Corporation tax within three months of starting to trade, PAYE before your first payday if you are hiring, VAT if you expect to exceed the threshold, and the Construction Industry Scheme if you work in construction. Each has its own deadline running from the date you start trading rather than the date you incorporated.
- Company formation, or self assessment registration for sole traders
- Corporation tax registration within three months of trading
- PAYE scheme before the first payroll run
- VAT registration where the threshold applies
- CIS registration for construction businesses
- Data protection registration with the ICO where relevant
3. Set up bookkeeping from day one
Open a separate business bank account before you take your first payment. Mixing personal and business transactions is the single biggest driver of accountancy fees for new businesses, because someone eventually has to unpick every line.
Connect that account to cloud accounting software, turn on receipt capture, and get into the habit of photographing receipts at the point of spend. Retrofitting a year of records costs several times what doing it properly from the start does, and you will lose legitimate deductions along the way.
- Separate business bank account with a live feed into your software
- Cloud accounting set up with a sensible chart of accounts
- Invoice templates with correct legal details and payment terms
- Receipt capture app in use from the first purchase
- A weekly slot in the diary for reconciliation
4. Understand what you will owe, and when
New business owners routinely spend money that was never theirs. Tax, VAT and PAYE all accrue as you trade and fall due months later, which makes a healthy bank balance deeply misleading.
The fix is mechanical: open a second account and move a fixed percentage of every receipt into it the day it lands. Whatever the correct percentage turns out to be for your business, having the money set aside is what turns a tax bill from a crisis into an administrative task.
5. Plan the cash, not just the profit
Profitable businesses fail on cash. A twelve-month cash flow forecast, even a rough one, shows you the months where outgoings exceed receipts and gives you time to do something about it, whether that is arranging facilities, changing payment terms or delaying a purchase.
Build in the lumpy items people forget: insurance renewals, VAT quarters, corporation tax nine months after year end, equipment replacement and the gap between invoicing and getting paid.
Support for Derby start-ups
We work with new businesses across Derby and Derbyshire, and local knowledge genuinely shortens the process: what business rates look like on premises in the city, which lenders and grant schemes are realistically accessible to a start-up in the region, and what the first year typically looks like in the sectors that dominate locally.
A first meeting with a Derby accountant before you trade usually costs nothing and reliably saves money. Structure decisions in particular are far cheaper to get right at the start than to correct in year two.
6. Diarise the deadlines now
Put every date in a shared calendar in your first week: your accounting reference date, the confirmation statement anniversary, VAT quarter ends, monthly PAYE payments, the corporation tax payment date nine months and one day after year end, and 31 January for self assessment.
Deadlines missed through disorganisation cost exactly as much as deadlines missed for any other reason. Fifteen minutes with a calendar in week one removes almost all of that risk for the entire life of the business.