Whilst it is true that you may not need to file any accounts until you have completed your first year of trading, I would suggest that meeting with an Accountant in the early stages of starting your new business is a really good idea.
Getting the right advice at the outset will ensure that you get things right from the start. No-one wants to sit down with an Accountant after their first years trading is complete to hear “why did you do this or why did you do that, or if only you had done this you could have saved lots of tax”
There are lots of considerations when starting your business and making the right choices for your business could make a big difference to your overall tax liability.
Some of the things you should seriously consider when starting your business are as follows:
- What legal status should you trade under? Would you be best off as a sole trader, partnership, Limited liability partnership or private Limited company? You need to make this choice from the start as you cannot change this retrospectively.
- Should you register for VAT? If your turnover exceeds £81,000 then VAT registration is, in most cases, compulsory. However you can register voluntarily with a turnover below £81,000 and this could be beneficial for you.
- Are there any special schemes you could take advantage of such as the flat rate scheme for VAT, or cash accounting for VAT and income tax?
- Would it be beneficial to provide certain benefits through the business such as a company vehicle or medical or life assurance.
- If you have a business partner have you considered a partnership or share holders agreement? Have you decided how you will split the business profits between you?
- Have you thought about how you will keep your accounting records ? What systems will you use to ensure you have a good handle on the business finances and to ensure you give a good set of records to your Accountant at the end of the year in order that they can process your accounts efficiently and cost effectively.
- What terms should you negotiate with your customers and suppliers to ensure you can maintain the business cash flow and remain solvent and profitable.
- Have you considered what finance the business may need and how you can seek to raise this. There are many ways of accessing finance such as traditional Bank loans to crowd financing, venture capital and schemes such as EIS and SEIS.
You may have other considerations and concerns apart from those listed above and taking professional advice from the outset can help ensure you make the right decisions.