How to start a new business

Once you have decided to start a new business, you need to know what your next steps are. Doing so can help ensure that your business sets off on the right foot.

With the right planning in place, you can ensure that your business is compliant with commercial law whilst also streamlining your finances from the start.

Structuring your company

The first decision that you should make regarding your business is what company structure it will be using. Making this decision early will impact your financial planning, so you must choose the right structure.

Structures that could suit your business include:

If you are unsure that you are going to choose the right structure for your business, getting advice is key. However, you can change your business structure later down the line to adapt to the needs of your business.

Planning your taxes

Once you have settled on a business structure, it is time to get on top of your tax planning. Doing this ahead of time can ensure that you are compliant whilst also offering opportunities to reduce your tax liabilities.

If you are operating as a partner or sole trader, profit from your business will be considered as personal income. This means that you should report it through ITSA through your online account with HM Revenue & Customs (HMRC).

When operating as a director of a limited company, you are likely to be salaried. In this case, tax is paid through PAYE. If you receive income from dividends, you may need to report it via ITSA.

The business will also be required to pay Corporation Tax at the following rates:

If your taxable turnover exceeds £90,000 in a 12-month period, you will also need to pay and register for VAT. In this case, you will need to comply with Making Tax Digital (MTD) and report your VAT returns quarterly.

Planning can help you to minimise your tax liabilities. For example, you should take into consideration allowable expenses and deductible expenditures.

Setting up your accounts

It is important for you to set up your accounts from the moment your business begins. This includes keeping comprehensive records of all transactions, including expenses and invoices.

You can use these records to report your taxable profits and income via your Company Tax Return or Self-Assessment. It may be advisable to integrate accountancy software into your accounts process.

Getting funding

When starting a new business, you might be seeking funding to help you get started. There are several ways you can do this, including:

The type of funding you receive will impact your tax liabilities, so make sure that you pay careful attention to your reporting requirements.

Getting advice

If you are completely new to running a business, you should seek expert advice. Talking to an accountant can be a great place to start.

Not only can we advise you on choosing the right company structure, but we can also support your tax planning.

Contact our team today to talk about how we can help you set up your new business venture.

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