Starting a business in 2025 is exciting—but staying financially organised from day one is what separates thriving startups from those that struggle. In today’s competitive, regulation-heavy environment, your accounting system isn’t a back-office task—it’s a business-critical function.
This practical checklist is designed to guide new UK startups through the most important accounting steps, from registration to reporting and everything in between.
1. Choose the Right Legal Structure
The first big decision? Your legal structure. This will influence how you’re taxed, your personal liability, and how your business is perceived.
- Sole trader: Great for simplicity, but you’re personally liable for business debts.
- Limited company: Offers protection and tax efficiency, though there’s more admin involved.
Think beyond day one—do you plan to scale, raise funding, or hire staff? If so, setting up a limited company may offer better long-term flexibility and credibility.
2. Register with HMRC or Companies House
To trade legally, you’ll need to register:
- Sole traders must register for Self Assessment with HMRC.
- Limited companies must register with Companies House. You’ll also need:
- Articles of Association
- Shareholder and director details
- A registered office address
After registration, you’ll be assigned a UTR (Unique Taxpayer Reference) for Corporation Tax filings. Missing deadlines can lead to fines, so this step should be handled with care.
3. Open a Business Bank Account
This might seem basic, but it’s crucial: always keep your business and personal finances separate.
A business account helps you:
- Track spending and income more accurately
- Prepare for tax returns with cleaner records
- Show professionalism when dealing with clients and suppliers
Digital-first banks like Starling, Monzo Business, and Tide offer quick setup, modern features, and integrations with leading accounting platforms.
4. Choose the Right Accounting Software
Manual spreadsheets don’t scale. Use accounting software that supports your growth, saves time, and keeps you compliant.
Must-have features:
- Real-time bank feeds
- VAT and MTD (Making Tax Digital) support
- Automated invoicing
- Receipt scanning via mobile
- Payroll capabilities
Top tools include:
- Xero – Known for its automation and integrations
- QuickBooks – Excellent for user-friendliness
- FreeAgent – Built for freelancers and small teams
Start with a plan that matches your business size and upgrade as you grow.
5. Understand VAT and When to Register
VAT can be a blessing or a burden depending on how it’s handled.
You’re required to register if your annual taxable turnover exceeds £85,000, but voluntary registration can offer benefits:
- Reclaim VAT on expenses
- Signal professionalism to clients
- Avoid issues when scaling quickly
Three schemes to consider:
- Standard – Full reclaim but more admin
- Flat Rate Scheme – Simplified payments but limited reclaims
- Cash Accounting – Pay VAT only when you’re paid (good for cash flow)
Discuss these options with an accountant to determine the best fit.
See also: How to Build a Strong Business Credit Profile for Proprietary Firm Approval?
6. Track Expenses from the Start
Every receipt matters. From day one, develop the habit of tracking all expenses.
Common deductible costs:
- Travel and fuel
- Subscriptions and tools
- Marketing and branding
- Equipment and software
With good software, you can scan and categorise expenses on the go. This keeps your books clean and maximises deductions at year-end.
7. Work With an Accountant Who Knows Small Businesses
An experienced accountant is one of the best investments you can make. They don’t just file taxes—they help you think strategically.
Your accountant should:
- Offer tax-saving advice specific to your business model
- Help you stay on top of deadlines
- Manage payroll and pension auto-enrolment
- Generate reports that help you make data-driven decisions
Fusion Accountants helps small businesses in the UK grow with confidence by combining modern tools with hands-on expertise. They are an accountants in London team providing support for SMEs and startups, and understand the unique pressures faced by new businesses, offering clear, proactive guidance at every stage of the journey.
Bonus Tips for Startup Success
- Set aside tax reserves: Put away 20–30% of profits each month to cover VAT and Corporation Tax.
- Automate reminders: Use your software to flag upcoming deadlines—especially for VAT, payroll, and company filings.
- Hold monthly financial check-ins: Know your cash flow, aged receivables, and spending patterns.
- Review your setup as you grow: New hires, revenue streams, or investment will change your needs—adjust accordingly.
Final Thoughts
Startups that succeed are the ones that build solid financial systems from day one. This checklist gives you the framework—but it’s expert support that brings it to life.
If you’re looking for practical advice, smart systems, and a long-term partner who understands small businesses, Fusion Accountants helps small businesses in the UK grow with confidence—and they’re ready to help yours too.
