There is much to consider when starting a new business. Beyond product, price, premises and all the other marketing Ps, you need to know how (and when) to pay your tax.

In short, here are our top accountancy tips for new businesses.

1)   Work out what type of tax entity your new business is

In other words, decide what structure your business takes. There are many potential options. For example: ‘limited’ (‘Ltd’); ‘limited liability partnership’ (‘LLP’); ‘public limited company’ (‘plc’). Choosing the right option matters because it will have implications on how you pay your tax. Furthermore, it can affect how much tax you pay. Therefore, it is crucial to know the best option for your circumstance.

Sometimes, it may seem like the answer is obvious. For example, if you work for yourself then you are most likely to fall under the bracket of self-employed ‘sole trader’. Nevertheless, your personal circumstances and the imposing taxation rules may lead you to choose an alternative structure.

If you are unclear, there are a number of ways to learn more. Firstly, HMRC offer general guidance. Secondly, you can ask an expert for advice. For instance, you’re welcome to call us. At Worthwhile we have many years experience on all structures so can quickly help you work out the best way forward. Furthermore, we will not charge you for an initial chat to help you get started…

2)   Tell HMRC about your business

Second on our list of accountancy tips for new businesses: let HMRC know your business exists. Once you have worked out the best structure for it, you must register your business with HMRC. This will then enable you to file and pay your taxes.

If, for example, you earn more than £1,000 from self-employment between 6 April 2020 and 5 April 2021 then you must set up as a sole trader. As a result, you will be able to pay your tax through “Self Assessment” and you’ll need to file a tax return every year.

Setting up a limited company may seem daunting but here at Worthwhile Accountancy we can take care of this – from getting the name to setting up the business ownership to setting up all the associated tax accounts.

3)   Keep records

This is a critical entry on our list of accountancy tips for new businesses. Most importantly, keep records of sales and expenses. Without these, you are unable to work out or, therefore, pay your tax. Furthermore, you cannot work out your profit. As a result, you won’t know how much you are earning.

There is further reading out there on keeping records. Nevertheless, it is such an integral part of running a business that it is worth seeking professional guidance. Most importantly, this could save you so much time. For instance, there may be a much quicker way for you to keep records. On the other hand, perhaps you should outsource the record keeping so you can focus on bringing in business? At Worthwhile, for instance, we offer flexibility. Consequently, we support businesses to keep their own records. Likewise, we manage all recording keeping on behalf of clients too. Above all, we meet your needs.

4)   Pay tax on time

This entry on our list of accountancy tips for new businesses sounds obvious. It is, however, worth mentioning because it is so important. Late payment potentially incurs financial and other penalties. If you suspect you have missed a deadline then the best advice is to take action straight away. So, contact HMRC and let them know. Likewise, consider whether you need extra help with managing your taxes.

5)   Think carefully if you need more help

At Worthwhile, we have many talented clients. Skills range from creative to practical and everything in between. Those skills are at the heart of what drives our clients’ businesses. What all of them share, however, is that they know they are not best placed to do the day to day accounts. Some simply don’t enjoy it. Almost all feel that their efforts are better focussed elsewhere. In other words, bringing in business and earning money. Many also find it reassuring to have accountancy expertise on board too.

To find out more, please contact us.