Start-ups
Accountant for Start-ups and New Businesses
The decisions that are cheap to make at the start — structure, share split, what you register for — are expensive to undo later. This is the point at which advice is worth most.
Setting up a company takes twenty minutes online. Working out whether you should, who holds the shares, when to register for VAT and what you are committing to as a director takes rather longer, and it is the part that determines what the next few years look like. We would rather have that conversation before the company exists than unpick it afterwards.
We work with new businesses across London, Finchley, Enfield and North London — first-time founders, people going out on their own after employment, and existing sole traders deciding whether to incorporate.
Sole trader or limited company
Modelled on your expected profit, not on general advice.
Formation done properly
Company set up, share structure decided, registrations made.
Bookkeeping from day one
Software set up so the records are right before the volume arrives.
What you owe and when
A calendar of your obligations, so nothing arrives as a surprise.
Sole trader or limited company
A sole trader keeps things simple: no filing at Companies House, no separate corporation tax return, nothing published. The trade-off is unlimited personal liability and, above a certain profit, a higher overall tax cost. A company limits liability, is often more tax-efficient once profits are established, and looks more substantial to larger customers — at the price of public accounts, a director's legal duties, and more administration.
The crossover point depends on your profit, whether you need to draw everything you earn, and what your customers expect. We run the figures both ways rather than starting from an assumption.
Getting the share structure right
Two founders taking fifty percent each is the most common arrangement and the one that causes the most trouble, because neither can carry a decision if they fall out. Think about what happens if one of you leaves early — shares that vest over time protect the person who stays. If you intend to raise investment later, keep the structure simple: SEIS and EIS relief matter enormously to early investors, and an unusual share class or an early misstep can put that relief out of reach.
What to register for, and when
- Corporation tax — within three months of starting to trade
- PAYE — before the first payment to any employee, including yourself
- VAT — compulsory above the threshold, sometimes worth doing voluntarily before it
- Self-assessment — for each director drawing dividends
Voluntary VAT registration is worth considering if your customers are VAT-registered businesses, because they recover what you charge and you recover what you spend. If you sell to the public it usually just makes you more expensive. It is a commercial decision as much as a tax one.
SEIS and EIS: raising money tax-efficiently
If you are raising from private investors, the Seed Enterprise Investment Scheme is the single most valuable thing to understand before you take any money.
It gives an investor income tax relief on what they put in, exemption from capital gains on the growth if the shares are held long enough, and relief against income if the company fails — which is why an SEIS-qualifying round is dramatically easier to raise than one that is not. EIS does something similar for larger raises once SEIS is used up.
The conditions are strict and several of them are about timing. The company has to be young enough, small enough and doing a qualifying trade; the shares must be new ordinary shares, fully paid in cash, with no preferential rights; and advance assurance from HMRC before the round is what most investors will ask to see.
The part that catches founders is that it is easy to disqualify a round by accident — the wrong share class, money received before the paperwork, or an investor who is connected to the company. Once the shares are issued it cannot be undone.
Costs you paid before you started
Expenditure in the seven years before trading begins can generally be relieved as if it were incurred on the first day of trade. Equipment, software, professional fees, market research and the incorporation itself usually qualify.
People throw these receipts away because the business did not exist yet. Keep them — for most start-ups the pre-trading total is enough to matter in the first profitable year, and VAT paid before registration can also be reclaimed within limits once you register.
Your first year is not twelve months
The dates a new company is given at incorporation are decided by when it was registered, and they produce a first year that almost nobody expects. Understanding it early prevents a series of small, avoidable penalties in year one.
The first accounting period is usually longer than a year
Companies House sets your first accounting reference date to the end of the month in which the company was incorporated, one year later — so a company formed on 10 March gets a first period running to 31 March the following year, which is twelve months and three weeks.
But a corporation tax period cannot exceed twelve months
Which means that longer first period has to be split for tax: one return for the first twelve months and a second for the remaining days. Two returns, two computations, for a single set of accounts. Founders who file one and consider the matter closed receive a penalty for the one they did not know existed.
You can change the date, and sometimes should
The accounting reference date can be shortened, and doing so early is straightforward. It is worth thinking about rather than accepting the default: aligning your year end with the natural rhythm of the business, or with the tax year, can make everything downstream simpler — and if your trade is seasonal, having a year end at the quiet point means counting stock when there is least of it.
The deadlines are not the same either
Accounts go to Companies House on one timetable, the corporation tax return goes to HMRC on another, and the tax itself is payable earlier than the return is due — which reliably surprises people, because it means the payment deadline can pass before the figure has been finalised.
Frequently asked
How much profit before a limited company is worth it?+
There is no fixed number — it depends on how much you need to draw, whether you have other income, and what your customers expect. The tax saving narrows considerably if you have to take out everything the company earns. We will model it on your figures rather than quote a threshold.
Can I pay myself whatever I like from my company?+
Not freely. Salary goes through PAYE. Dividends can only be paid from distributable profits and have to be properly declared. Money taken outside either route becomes a director's loan, and if it is still outstanding nine months after the year end the company pays a tax charge on it.
What can I claim for before I started trading?+
Qualifying costs in the seven years before you begin trading can generally be treated as incurred on the first day of trade. Keep the receipts — equipment, professional fees, initial stock and market research usually qualify.
When do I need an accountant?+
Before you register, ideally. Structure, share split and registration dates are all cheap to decide correctly at the start and expensive to change later. The initial conversation costs you nothing.
What is SEIS and do I need it before raising?+
The Seed Enterprise Investment Scheme gives your investors income tax relief, a capital gains exemption on the growth, and loss relief if it fails — which makes a qualifying round far easier to raise. Get advance assurance from HMRC before you take money: the conditions are strict, several are about timing, and once shares are issued a disqualified round cannot be undone.
Can I claim things I bought before the company existed?+
Generally yes — expenditure in the seven years before trading starts is treated as incurred on day one. Equipment, software, professional fees and incorporation costs usually qualify, and pre-registration VAT can be reclaimed within limits once you register. Keep the receipts even though the business did not exist yet.
Why do I have to file two corporation tax returns in my first year?+
Because your first accounting period is usually longer than twelve months — Companies House sets it to the month end a year after incorporation — while a corporation tax accounting period cannot exceed twelve months. The long period is therefore split: one return covering the first twelve months and one covering the remaining days. It is normal, it is not a mistake, and missing the second is a common first-year penalty.
Can I change my company year end?+
Yes, and it is easier to do early than later. There are limits on shortening and extending repeatedly, but the first change is usually straightforward. It is worth a moment’s thought rather than accepting the default: a year end that falls at a quiet point in your trade means less stock to count and fewer open jobs to value, and aligning with the tax year can simplify the personal side.
When do I actually have to pay the corporation tax?+
Before the return is due, which catches almost everyone. For most small companies the tax is payable nine months and one day after the end of the accounting period, while the return itself is not due until twelve months after. The practical consequence is that you need the figure ready well before the filing deadline — so leaving the accounts until the last month means paying late even if you file on time.
Local to you
Chartered accountants, just up the road.
We are based in Finchley and work across North London. Come in, call, or do the whole thing by email — whichever suits you.
Or call 07480 281548