You must first register with HMRC after which they will send you a Unique Taxpayer Reference (UTR) and set up the right tax and National Insurance contributions. Your UTR will be used to complete the self-assessment tax return at the end of the accounting year.

Self-Assessment is a system that HMRC uses to collect Income Tax. The tax return shows how much an individual has earned and from what sources over the course of a tax year. Most business owners have to prepare a tax return and then send it to HMRC and pay their tax bill by 31st January every year. From April 2026, self-employed individuals and property landlords with a gross income of £50,000 will need to keep digital records and submit quarterly updates rather than one annual return. The deadlines will be 7th August, 7th November, 7th February, 7th May. At the end of the tax year, a final declaration will need to be made. At this point any adjustments can be made to your records. The final declaration will replace your current annual self-assessment tax return. As with the current process you will only need to make a single tax payment by 31st January the following year.

You will first need to choose a company name which is available. You will then need to appoint directors & shareholders of that company. You will need at least one director and one shareholder (both can be the same person). People with Significant Control (PSC) will also need to be allocated. You will then need to register with the Companies House providing a registered address, director details, a SIC Code, and a PSC/Director Verification Code.

This is a return which is filed for each accounting period by companies and organisations liable for Corporation Tax. When you have created a Limited Company, you will automatically register for Corporation Tax when incorporating. You must file a return every year even if your company or organisation hasn’t made any taxable profits. For companies making profits up to £50,000, the rate will be at 19%. For companies making profits over £250,000, the rate will be at 25%. Companies making profits in between this will pay an effective rate (marginal relief) between 19% and 25%. Those with profits over £1.5 million must pay in quarterly instalments. The return will be due 9 months and 1 day after the end of the accounting period.

The Construction Industry Scheme (CIS) sets out special tax rules and methods for handling payments that apply to contractors and subcontractors working within the construction industry. It may also apply to local authorities, government departments and management organisations that spend £3m or more a year on construction. HMRC will deem you to be a CIS contractor if you engage subcontractors for construction operations; your business spends on average £3 million or more over the year on construction operations or if you are contracted to work in domestic households and engage subcontractors to complete the work. You are deemed a CIS subcontractor if the contractor that hires you decides you are self-employed for the purpose of the contract. Registration as a subcontractor under CIS will result in HMRC setting you up to receive payments under deduction. Contractors will deduct 20% tax from your invoice and pay HMRC.

To register for Pay As You Earn (PAYE), you will first need to check your eligibility to register even if you’re a sole director of a limited company. You will need to register as an employer on the Gov.UK website. HMRC will send your employer PAYE reference number and Accounts Office reference number by post. You will then need to activate your PAYE Online account within 28 days. You will then need to record employee details, calculate deductions and submit reports such as the Full Payment Submission (FPS) on or before payday.

Value Added Tax (VAT) is an indirect tax added to most goods and services sold by VAT-registered businesses in the UK. It is a consumption tax collected from customers at each stage of production and distribution, ultimately borne by the final customer. The standard rate is at 20% which applies to most goods and services. The reduced rate is at 5% which applies to specific items such as home energy. The zero rate is at 0% and applies to items like books, children’s clothing and most food. There are also items which are exempt from VAT such as insurance, money loans, property transactions, health care and private school fees.

You only can register for VAT if your business is making taxable supplies. A business is defined as a continuing activity involving getting paid for providing goods or services – in money or another form of payment such as in-king or barter. Taxable suppliers are anything you do by way of your business not just those things done in the ordinary course of its day to day running. Registration for VAT is compulsory if in the last 12 months your taxable turnover of goods and services supplied within the UK goes over the current threshold of £90,000 or if you expect it to go above that figure in the next 30 days alone. However, if your turnover has only exceeded the threshold temporarily, you may apply for exemption from registration.

There are many cash flow advantages to registering for VAT before reaching the current threshold. You may benefit if you sell zero-rated items and buy standard rated items as you will receive a VAT refund from HMRC or alternatively if you don’t sell anything during the VAT accounting period, you may still be able to claim VAT on your purchases. You can also apply to backdate your VAT registration by up to 4 years however you must be able to provide proof and meet other conditions for reclaiming VAT such as ensuring your business exceeded the VAT registration threshold but failed to register on time, you voluntary opted for VAT registration and want to reclaim VAT on past expenses, and you have accurate VAT records for the backdated period.

A Balance Sheet is a key financial statement which shows a ‘snapshot’ of a company’s financial position at a specific point in time. It will show what a company owns (assets), owes (liabilities), and the owner’s stake (equity). It follows the formula: Assets = Liabilities + Shareholders’ Equity, used to evaluate liquidity, leverage, and overall financial health. It also allows owners to compare year-on-year performance.

An Income Statement or Profit & Loss Statement is a financial report that summarises a company’s revenue, costs, and expenses incurred during a specific period. It measures profitability by subtracting total expenses from total revenue to determine net income or loss. By comparing Income Statements over different periods, owners can identify trends and make informed decisions to improve profitability.

A Cash Flow Statement shows how cash moves in and out of a business categorised into Operating, Investing and Financing activities. It is used to determine if a company has enough cash to pay its debts and expenses. It is used to evaluate performance of a business to earn cash and also the financial health which indicates if the company is in a positive or negative cash flow position.

A Statement of Changes in Equity is a financial report which summarises the movement in company’s owner’s equity (share capital, retained earnings, reserves) over a specific accounting period. It reconciles the opening and closing balances, reflecting net income, dividend payments, and share issuances. This statement bridges the gap between the income statement (profit) and the balance sheet (equity position). It is also used to provide transparency for investors and creditors regarding how a company manages its capital.

A strong business plan is needed to set out a clear direction with how your business will operate currently and in the future. It will also be used to identify potential risks prior to setting up your business. A business plan is also essential if you are looking for credit, business loans or overdrafts from banks or other lenders. It is important that your business plan sets out all the main points and provides a clear snapshot of the business idea. Your plan should include: An Executive Summary, Business Overview, Business Strategy, Marketing, Team and Management, and Financial Budgets and Forecasts.