The excitement of launching a new business can make financial admin feel like a chore — but the decisions you make in your first few months have a lasting impact. Here’s how to get your bookkeeping right from day one.
Open a Separate Business Bank Account
The most important step — and one that’s often overlooked. Mixing personal and business finances creates a bookkeeping nightmare. Open a dedicated business bank account before your first transaction. Most UK banks offer free business banking for the first 12–24 months.
💡 Key takeaway
Set up your chart of accounts before your first transaction — retrofitting categories later wastes hours and creates inaccurate historical data.
Choose Your Accounting Software
Set up cloud accounting software — Xero or QuickBooks — from the start. Retrospective data entry is time-consuming and error-prone. Starting clean means your records are accurate from day one and you’re MTD-ready when the time comes.
🧑💼 Sole Trader
- Simple to set up — no registration
- All profits taxed as personal income
- Unlimited personal liability
- Lower admin burden
- No annual accounts at Companies House
🏢 Limited Company
- Separate legal entity
- Pay corporation tax on profits
- Directors take salary + dividends
- More credibility with larger clients
- Higher admin and filing requirements
Register With HMRC
Register as self-employed with HMRC as soon as you start trading — even before you earn anything. You have until 5 October of your second year of trading, but earlier registration avoids late notification penalties and means you’re set up to make advance payments on account.
Track Everything From Day One
Record every transaction as it happens — income, expenses, mileage, equipment purchases. The habit is much easier to establish early than to develop after months of backlog. A bookkeeper can manage this for you from the start, leaving you free to focus on building the business.
Plan for Tax
Set aside 25–30% of every payment received into a separate tax savings account. Calculate this based on profit (income minus expenses), not total turnover. Understanding your tax obligations from the start prevents the shock of the first self assessment bill.
Frequently Asked Questions
When do I need to register for VAT?
When your taxable turnover exceeds £90,000 in any 12-month rolling period. You can register voluntarily below this threshold.
What’s the first thing to do financially when starting a business?
Open a separate business bank account. It’s the single most important step for clean bookkeeping.
Should I hire a bookkeeper from the start?
If your budget allows, yes — establishing clean records from day one saves significant cost and stress later. Many bookkeepers offer affordable packages for new businesses.
