Starting a business in the UK is a thrilling journey. You're filled with innovative ideas, a strong vision, and the drive to succeed. But amidst the excitement of building your brand, there's a critical element that can't be overlooked: accounting and HMRC compliance.
Getting your finances right from day one is essential for sustainable growth and avoiding costly penalties. It’s not just about paying taxes; it’s about making smart decisions, understanding your cash flow, and building a solid financial foundation.
This ultimate guide breaks down the core accounting and compliance requirements for UK startups, culminating in a simple, actionable checklist from Periwin Solutions.
Step 1: Laying the Foundations – Your First Moves
Before you make your first sale, you need to set up the legal and financial backbone of your business.
1. Choose Your Business Structure:
Your first decision impacts everything from your tax obligations to your personal liability.
Sole Trader: Simple to set up. You are personally responsible for all business debts. You register for Self Assessment with HMRC.
Limited Company: A separate legal entity from its owners. It offers limited liability, protecting your personal assets. You must register with Companies House and HMRC for Corporation Tax.
Partnership: Suitable for two or more people sharing profits and responsibilities.
2. Register with HMRC:
You must inform HM Revenue & Customs (HMRC) about your new venture.
For Sole Traders/Partnerships: Register for Self Assessment by 5 October after the end of your first tax year. (The UK tax year runs from 6 April to 5 April).
For Limited Companies: Register with Companies House first. HMRC is automatically notified and will send you a Unique Taxpayer Reference (UTR). You must then register for Corporation Tax within three months of starting to trade.
3. Open a Business Bank Account:
This is non-negotiable. Keep your business finances separate from your personal ones. It simplifies record-keeping, builds credibility, and makes tax returns a breeze.
Step 2: Day-to-Day Bookkeeping Essentials
Once you're set up, establish a routine for managing your finances.
1. Track Every Pound:
Keep meticulous records of all income and expenses. This includes sales invoices, receipts, and bank statements. Your records must be accurate and stored safely for at least six years.
2. Choose the Right Accounting Software:
Manual spreadsheets are a recipe for headaches. Invest in a cloud-based accounting software like Xero, QuickBooks, or FreeAgent. These tools automate data entry, track expenses, generate invoices, and integrate with your bank, saving you hours of work.
3. Manage Your Receipts:
Whether you use a scanner, a mobile app, or a simple folder, have a system for storing receipts for all business expenses. This is vital for reclaiming eligible costs and reducing your tax bill.
Staying on top of deadlines is crucial to avoid penalties. Here are the key obligations you need to know:
1. VAT (Value Added Tax) Registration:
You must register for VAT if your business's taxable turnover exceeds the £90,000 threshold in any rolling 12-month period, or if you expect to exceed it in the next 30 days.
Once registered, you must submit VAT returns and pay any VAT due, typically every quarter, using Making Tax Digital (MTD)-compliant software.
2. PAYE (Pay As You Earn) & Payroll:
If you hire employees (including paying a director’s salary), you must register as an employer with HMRC and operate a PAYE scheme.
You'll need to calculate and deduct income tax and National Insurance from your employees' wages and pay it to HMRC on time, usually monthly.
Your Periwin Solutions Accounting & Compliance Checklist
Here is a simplified, actionable checklist to ensure you stay compliant and financially organized.
✓ Register with HMRC for your chosen business structure.
✓ Open a dedicated business bank account for all transactions.
✓ Choose and set up cloud-based accounting software. ✓ Implement a system for tracking all income and expenses. ✓ Monitor your turnover to see if you need to register for VAT.
✓ Set up PAYE with HMRC if you plan to hire employees.
✓ Know your tax deadlines and set reminders well in advance.
✓ Appoint an experienced accountant to guide you through the process and save you time and money.
Don't Let Compliance Be a Roadblock to Growth.
Navigating UK accounting and compliance can be challenging, but you don't have to do it alone. At Periwin Solutions, we specialize in providing precise, compliant, and proactive accounting services for startups and SMEs in the UK.
We handle the numbers so you can focus on what you do best: building your business.
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Gurkha's Mountain Adventure
Periwin Solutions Pvt Ltd has been instrumental in growing Gurkhas Mountain Adventure. Their expert web development improved our efficiency and online presence, creating a user-friendly platform that reflects our brand. Their ongoing support has enhanced client engagement, and I highly recommend them for their professionalism and excellence.
Bhabi Gurung
Founder
Suva Tours and Travels
Periwin Solutions Pvt Ltd has been a vital partner in the growth of my travel company, Suva Tours and Travel. Their expertise in building my website has significantly streamlined our operations and enhanced our online presence. The team was attentive to my needs, delivering a user-friendly platform that truly reflects our brand. Their ongoing support has been invaluable, helping us engage more effectively with our clients. I highly recommend Periwin Solutions for their professionalism and commitment to excellence!
Niranjan Chalise
Founder
Little Stars Academy
Running a school in today’s digital age requires robust IT systems, and Periwin Solutions has been a tremendous help for Baltara Pratisthan. Their solutions are tailored, efficient, and designed to enhance productivity and communication. The professionalism and dedication of their team are truly commendable. We are grateful for their excellent service and continued support.
Damodar Poudyal
Founder
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Starting a business in the UK is a thrilling journey. You're filled with innovative ideas, a strong vision, and the drive to succeed. But amidst the excitement of building your brand, there's a critical element that can't be overlooked: accounting and HMRC compliance.
Getting your finances right from day one is essential for sustainable growth and avoiding costly penalties. It’s not just about paying taxes; it’s about making smart decisions, understanding your cash flow, and building a solid financial foundation.
This ultimate guide breaks down the core accounting and compliance requirements for UK startups, culminating in a simple, actionable checklist from Periwin Solutions.
Step 1: Laying the Foundations – Your First Moves
Before you make your first sale, you need to set up the legal and financial backbone of your business.
1. Choose Your Business Structure: Your first decision impacts everything from your tax obligations to your personal liability.
Sole Trader: Simple to set up. You are personally responsible for all business debts. You register for Self Assessment with HMRC.
Limited Company: A separate legal entity from its owners. It offers limited liability, protecting your personal assets. You must register with Companies House and HMRC for Corporation Tax.
Partnership: Suitable for two or more people sharing profits and responsibilities.
2. Register with HMRC: You must inform HM Revenue & Customs (HMRC) about your new venture.
For Sole Traders/Partnerships: Register for Self Assessment by 5 October after the end of your first tax year. (The UK tax year runs from 6 April to 5 April).
For Limited Companies: Register with Companies House first. HMRC is automatically notified and will send you a Unique Taxpayer Reference (UTR). You must then register for Corporation Tax within three months of starting to trade.
3. Open a Business Bank Account: This is non-negotiable. Keep your business finances separate from your personal ones. It simplifies record-keeping, builds credibility, and makes tax returns a breeze.
Step 2: Day-to-Day Bookkeeping Essentials
Once you're set up, establish a routine for managing your finances.
1. Track Every Pound: Keep meticulous records of all income and expenses. This includes sales invoices, receipts, and bank statements. Your records must be accurate and stored safely for at least six years.
2. Choose the Right Accounting Software: Manual spreadsheets are a recipe for headaches. Invest in a cloud-based accounting software like Xero, QuickBooks, or FreeAgent. These tools automate data entry, track expenses, generate invoices, and integrate with your bank, saving you hours of work.
3. Manage Your Receipts: Whether you use a scanner, a mobile app, or a simple folder, have a system for storing receipts for all business expenses. This is vital for reclaiming eligible costs and reducing your tax bill.
Step 3: Navigating Key Compliance Deadlines (2025/2026 Tax Year)
Staying on top of deadlines is crucial to avoid penalties. Here are the key obligations you need to know:
1. VAT (Value Added Tax) Registration:
You must register for VAT if your business's taxable turnover exceeds the £90,000 threshold in any rolling 12-month period, or if you expect to exceed it in the next 30 days.
Once registered, you must submit VAT returns and pay any VAT due, typically every quarter, using Making Tax Digital (MTD)-compliant software.
2. PAYE (Pay As You Earn) & Payroll:
If you hire employees (including paying a director’s salary), you must register as an employer with HMRC and operate a PAYE scheme.
You'll need to calculate and deduct income tax and National Insurance from your employees' wages and pay it to HMRC on time, usually monthly.
Your Periwin Solutions Accounting & Compliance Checklist
Here is a simplified, actionable checklist to ensure you stay compliant and financially organized.
✓ Register with HMRC for your chosen business structure.
✓ Open a dedicated business bank account for all transactions.
✓ Choose and set up cloud-based accounting software.
✓ Implement a system for tracking all income and expenses.
✓ Monitor your turnover to see if you need to register for VAT.
✓ Set up PAYE with HMRC if you plan to hire employees.
✓ Know your tax deadlines and set reminders well in advance.
✓ Appoint an experienced accountant to guide you through the process and save you time and money.
Don't Let Compliance Be a Roadblock to Growth.
Navigating UK accounting and compliance can be challenging, but you don't have to do it alone. At Periwin Solutions, we specialize in providing precise, compliant, and proactive accounting services for startups and SMEs in the UK.
We handle the numbers so you can focus on what you do best: building your business.
Ready to streamline your finances? Contact Periwin Solutions today to get expert-backed accounting support.