Essential Steps for New Small Business Owners to Stay Compliant and Thrive

Starting a new business is an exciting journey filled with dreams and ambitions. But, we know firsthand that it can also be a bit overwhelming. There are a lot of things to keep track of, especially when it comes to making sure you are compliant and that you stay that way, especially when things get busy.

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In this months’ article, we thought it would be helpful to share a checklist of the key things you need to do, to make sure you start your new business owner adventure on the right foot.

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1. Register Your Business

First things first, you need to register your business. Depending on your business structure, this could mean registering as a sole trader or limited company.

Let's break each down:

Sole Trader:

As a sole trader, you are the sole owner, fully responsible for operations and debts. You need to inform HMRC that you’re self-employed through their online self-assessment registration. This structure makes tax filing and paperwork easier, but you are personally responsible for any business debts.

Limited Company:

A limited company is a separate legal entity, providing limited liability protection. Registering involves choosing a company name, appointing directors and a company secretary (if applicable), determining shareholders and share structure, and registering with Companies House. You must also file annual accounts, submit corporation tax returns, and maintain proper financial records. Operating as a limited company protects your personal assets, can reduce your taxes, and also makes your business look more trustworthy to customers, suppliers, and investors

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The right structure depends on your business goals, risk tolerance, and financial management plans. For many small business owners, starting as a sole trader is a good way to test the waters with minimal complexity. As your business grows, you might consider transitioning to a limited company to benefit from additional protections and potential tax advantages.

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2. Understand Your Tax Obligations

Tax might not be the most exciting topic, but it’s crucial. Other than needing to register for a self-assessment as a sole trader you also need to register as a director for a self-assessment as you will have dividend income to declare.

You will need to register VAT if your turnover is expected to exceed the current ￡90k threshold.

?Keeping track of your income and expenses from day one will make tax time much less stressful. Trust us, it’s easier to stay organised than to play catch-up later on.

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3. Keep Accurate Records

Good record-keeping is the backbone of a compliant and successful business. Whether you use spreadsheets, accounting software (which we recommend), or a good old-fashioned ledger, make sure you document all financial transactions. This not only keeps you compliant but also gives you a clear picture of your business’s financial health.

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4. Set Up a Business Bank Account

Separating your personal and business finances is a must. Open a dedicated business bank account to manage your business’s money. This makes it easier to track expenses, manage cash flow, and stay on top of your financial obligations.

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5. Stay on Top of Payroll

If you’re planning to hire employees, you’ll need to set up a payroll system. This involves registering as an employer with HMRC and managing PAYE (Pay As You Earn). It might sound daunting, but there are plenty of payroll software options that can simplify the process.

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6. Get Familiar with Your Industry Regulations

Different industries have different regulatory requirements. Make sure you’re aware of any specific regulations that apply to your business. This could include health and safety standards, data protection laws, or licensing requirements. Staying informed helps you avoid potential legal issues down the line.

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7. Plan for Taxes Early

Don’t wait until the last minute to think about taxes. Set aside a portion of your income throughout the year to cover your tax bill, ideally in a separate bank account. This helps you avoid any nasty surprises when it’s time to file your return.

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8. Seek Professional Advice Early

Starting a business can feel like you’re juggling a hundred things at once, you should always seek help and advice early on. An accountant like us can offer guidance on compliance, tax planning, and financial management, freeing you up to focus on growing your business.

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Our Own Experience...

When we started our own business, we quickly realised the importance of having a solid financial foundation. One thing we learned early on is that it’s okay to ask for help. Trying to do everything on your own can lead to burnout and mistakes.

As Chartered Accountants we kept the financial work but we outsourced as much as we could such as marketing, IT support and HR Support, which made a world of difference for us, providing peace of mind and allowing us to concentrate on what we do best – helping other business owners like you.

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Remember, every big business started small. By taking these steps and staying compliant, you’re setting yourself up for success. And if you ever feel stuck or unsure, know that you’re not alone – we’re here to help you navigate the journey.

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Just get in touch on 0330 1340282 or email [email protected]