The importance of accountancy compliance for startups in the UK

When you start a business in the UK, it’s important to ensure your startup’s financial health begins and remains healthy.

A really important part of running a startup business is ensuring accountancy compliance and your legal obligations are met. This could include basic bookkeeping, filing tax returns, paying your tax liability on time, payroll management, national insurance contributions, financial reporting and generally managing finances.

In this blog, we will explore why accountancy compliance is key to startup businesses. First, let’s start with the basics.

What is a startup?

The definition of a startup can vary, but in its simplest form, a startup business is a company that has recently started. It’s an organisation opened by one or more entrepreneurs. Starting a business can be daunting for entrepreneurs that have never run a business before.

Startup businesses are often associated with higher risks and therefore, you need to focus on adopting good financial practices in the early stages of your business. These sound financial practices will ensure that you build and run a successful business later down the line.

Understanding UK accounting practices and regulations

For startups in the UK, navigating the complex landscape of accounting practices and regulations is crucial.

For small businesses, good accounting practices go much further however than just meeting UK accounting regulations and legal requirements. It’s about having the right information to make informed business decisions, improve business performance, manage cash flows, monitor your finances and enable long-term strategic planning.

Companies House & HMRC

What you need to do and who you need to contact to start a business will vary depending on your type of business, what your business does and whether you decide to employ others in your business. In the UK, you can set up a business and operate in the following ways:

• As a sole trader (How to register as a sole trader)
• As a partnership (How to set up and run a partnership)
• As a limited company (How to set up as limited company)

Companies House incorporate and dissolve limited companies.

HMRC is the UK’s tax, payments and customs authority. They collect the tax that pays for the UK’s public services. This is collected via various forms of tax on both individuals and companies and ensure that people and companies are tax compliant.

Whilst it’s important to familiarise yourself with UK accounting standards, financial regulations and tax laws and rates, it is unlikely that you want to become a financial and tax expert. This is why many startup business owners will hire a qualified accountant to provide accounting services and tax advice from the moment they set up their business.

Ensuring compliance with tax law and accounting rules will ensure that you pay the right amount of things like income tax, corporation tax and capital gains tax and you will avoid costly mistakes and incurring penalties for late filing or not paying what is needed on time.

Running a limited company: your responsibilities

Startup businesses that decide to run as a limited company will have many responsibilities and regulations they need to meet.

Find out more about running a limited company and your responsibilities here.

Set up as a sole trader: your responsibilities and how to set up

Find out more about what you need to do to register as a sole trader, plan for your tax bill and get help and support here.

Set up a partnership: your responsibilities and how to set up

Find out more about setting up a partnership and your responsibilities here.

Building a strong financial foundation

It is important from the time you start a business to establish a robust financial system to manage your business’s financial transactions and ensure strong financial health.

As a start up business owner, it’s important to develop a comprehensive financial plan to guide business decisions and drive growth. This plan will also help you if you require external funding for your new business.

Invest in a good accountant such as dns accountants and use accounting software to streamline financial processes and improve your financial management.

At dns accountants, we have an exclusive accountancy package designed for start up business owners that includes accounting software, bookkeeping, self assessment tax returns and financial returns. Find out more about our packages here.

Maintaining strong finances

There are a few things you need to consider in order to maintain the financial health of your startup.

• 1. One of the most important areas is understanding of your cash flow. This involves tracking all the money coming in and going out of your business.
• 2. Create and monitor a budget. This can be hard for startups as in the initial stages, they often have to survive on less money than they would like. But it’s important not overspend.
• 3. Keep an eye on the rate at which you are spending money relative to the amount of money you have coming in. If you are regularly spending more than you are earning, this won’t be sustainable in the long term.
• 4. Strategic financial planning will help with managing finances and should include both short-term and long-term goals.

Which services are available for startups from accountants?

Many business owners opt to hire professional accountants from the moment they start their business.

Accountants can be invaluable partners for startups, offering a wide range of essential services. They can assist with company formation, HMRC registration, and choosing the right business structure.

Accountants for startups can also provide ongoing services such as bookkeeping, payroll management, and tax planning. Using a professional accountant like dns accountants ensures accurate financial reporting, compliance with tax regulations and tax filings, regular financial statements and to help maximise growth potential.

Bookkeeping accountants for startups

Professional accountants can help startups by setting up and managing their bookkeeping. Spending time adding up receipts, pushing invoices around a desk or chasing for payment is nobody’s idea of fun, but it’s essential in the day to day running of your finances. Basic bookkeeping can help to save time, reduce risk, give you greater financial stability to make informed decisions and free yourself to run your business.

Payroll accountants for startups

Not only is payroll important to ensure you are compliant with ever changing legislation, but your employees also expect to be paid accurately and on time. Achieving this ensures you will build a happy and engaged workforce.

Here at dns accountants, we provide expert accountancy services that includes payroll management.

Self assessment accountants for startups

As a business owner, sole trader, freelancer or landlord, you may need to file a self assessment tax return.

We offer expert services to ensure your tax return is accurate, compliant, and submitted on time.

VAT accountants for startups

To lots of people Value Added Tax (VAT) appears to be a complex tax with lots of administration. Deciding whether to register for VAT is key, particularly for business startups.

If your startup is registered for VAT, dns accountants can help you manage your VAT obligations. They can ensure that you’re charging the correct amount of VAT, file your VAT returns on time, and claim eligible VAT refunds.

Year-end accounts services for startups

In the UK, year-end accounts are a vital aspect of financial management for businesses. Every business needs to prepare a set of accounts for HMRC and/or Companies House. Preparation of end of year accounts is a time consuming and daunting task.

Up to date accounts can provide valuable insights, help with informed decision making, long term success and future growth.

Tax planning & tax compliance services for startup businesses

Staying compliant with UK tax laws and paying what tax you owe on time will ensure legal compliance and will help to avoid costly mistakes and penalties from HMRC. But tax isn’t just about compliance. Implementing a comprehensive tax planning strategy can minimise tax liabilities and optimise financial performance.

Our tax planning team help businesses, individuals and property owners minimise their tax bill, build wealth, save money, claim back generous tax incentives and manage succession planning.

Accounting software and technology

Investing in accounting software will help startups to streamline financial processes and improve financial management. Software can help you to automate manual tasks, reduce errors and improve efficiency.

Here at dns accountants, we offer free software with our accounting packages.

Securing funding and investment

If you are looking to grow your business then an accountant can assist in securing funding and investment by providing a comprehensive financial plan and accurate financial reporting. Securing funding to grow can help you with strategic decision making, enabling you to look and plan up to 3-5 years ahead.

Choosing the right accountant for your startup

Once you’ve decided it’s time to hire an experienced accountant, the next step is to choose which accountant to hire.

Look for an accountant like dns accountants with experience in working with startups. Research the accountant’s fees and services to ensure they meet your business’s needs.

Building a strong relationship with your accountant

You need to trust your accountants, so spend time developing an open and transparent relationship with them. Be honest about your business goals and financial aspirations as well as challenges that you face. Ensure you provide what they need to ensure they can fulfil their obligations to you.

Look at your accountant as more than just someone to ensure compliance and provide financial statements. They should become a trusted advisor and partner and help you with strategic insights, business growth and ongoing business performance.

Evaluate the cost of accounting services against the potential benefits. This can include considering the value of accurate financial reporting and compliance with financial regulations vs facing penalties or interest charges on unpaid tax or non-compliance. Weigh up the accountants’ fees with the significant savings they can potentially help you to make in tax.

Developing a strong understanding of the cost-benefit analysis of employing an accountant will help you with financial planning, to make informed decisions and drive growth.

Conclusion

Going down the route of DIY accounting for your business can lead to costly mistakes. For this reason, UK startups need to consider hiring and accountant to help ensure they comply with latest tax laws and financial reporting requirements.

Accountancy compliance, financial planning and management is also crucial for startups in the UK to survive and thrive.

An accountant should help you with all financial matters including building a strong financial foundation for your business, maintaining healthy finances, strategic financial planning, attracting investors and developing effective accounting practices that are essential for success.

How can dns accountants help you with accounting services?

Accounting for startups

Getting a good accountant for your new business should be an early decision you make. Why? Having a startup accountant from day 1 or even when you’re still planning your business venture will ensure you get the support and advice you need to make your startup a success.

Whether it’s advice on your business structure, registering with HMRC, forming a limited company, accounting software, cash flow advice or tax compliance, dns can help with all that and more. We’ve got packages to suit your needs and budget. We’re award winning accountants that offer services online and in person.

How we help startups

Startup businesses are one of specialisms here at dns and we support thousands of startups every year. Our specialist team of accountants for startups offer a full range of services for all your accountancy, tax and startup needs.

• Company formation and bank account
• Accounting software
• Bookkeeping
• Self-assessment
• Year-end accounts & corporation tax returns
• Monthly payroll & payslips
• Quarterly VAT returns

For support and advice on setting up a business and all your accountancy and tax needs, contact us today on 0330 088 6686. You can also e-mail us at enquiry@dnsassociates.co.uk .

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