The paperwork and "list of things to do" can be daunting when setting up your business but all businesses must keep a record of their accounts for tax and auditing purposes. Self-employed freelancers don’t need to keep official accounts but do need to keep a record of income and tax-deductible expenses. Keeping on top of these accounts is paramount to your stress-levels! Don't leave them until the last minutes. It's a good idea to have a systematic way of keeping your records (a shoebox doesn't count).
Limited companies, social enterprise companies, and registered charities need to have a separate UK business bank. Partnerships and sole traders aren’t legally required to have separate business accounts, but it is a good idea to do so in order to keep accounting processes simple.
To apply, freelancers and sole traders/partnerships usually must provide a passport/ID for all partners, as well as proof of personal and business addresses. Limited companies usually need to provide a Companies House registration number, details of directors, and estimated annual turnover.
Most UK banks have a business manager or business-dedicated member of staff, who will usually want to meet you to discuss opening the business account, what your business goals are, and what you expect from the account. You might be encouraged to draw up a business plan or budgeting forecast; this is necessary if you plan to ask the bank for a loan at any point.
All UK businesses and UK entrepreneurs need to register with HMRC for tax purposes and are responsible for submitting their own tax returns.
Self-employed sole traders and those in partnerships pay taxes on business profits. Limited UK companies and foreign companies with UK branches need to register for Corporation Tax. The rate of Corporation Tax is 20% on profits, minus any allowances and relief.
UK businesses will also need to register for VAT if their annual turnover is more than £83,000, and may need to pay capital gains tax if business assets are sold at a profit.
The UK tax year runs from 6 April. Tax returns must be submitted and any tax owed paid by 31 January following the end of the previous tax year.
This is by far the most important aspect of starting your business so take the time to do it correctly and ask for advice if you need to.