Starting a Business in 2025? Your Step-by-Step Accounting Checklist for UK Startups
Launching a business in 2025 is filled with opportunity—but also risk. With tighter regulations, digital-first tax systems, and an evolving economic landscape, getting your financial setup right from the start is more important than ever.
This checklist is designed for UK startups that want to build solid accounting foundations, avoid common mistakes, and grow with confidence.
1. Choose the Right Legal Structure
Your business structure impacts how you’re taxed, how much personal liability you carry, and how easy it is to raise funding.
- Sole trader: Fast and flexible, but you’re personally liable for debts.
- Limited company: Offers more protection and tax advantages but requires extra admin and reporting.
The choice can feel overwhelming—especially in niche sectors or emerging industries.
They specialise in Small business accounting, in various sectors etc…—so they’re well-placed to help you evaluate what works best based on your business type and future plans.
2. Register with HMRC or Companies House
Once you’ve chosen a structure, the next step is registration:
- Sole traders register with HMRC for Self Assessment.
- Limited companies register with Companies House and provide:
- Director details
- Share allocations
- Articles of Association
- A registered office address
You’ll also need to register for Corporation Tax and receive your Unique Taxpayer Reference (UTR). Any mistakes here can delay operations, so professional help is often worth it.
3. Open a Business Bank Account
It’s tempting to use your personal account—but mixing finances creates a headache at tax time.
Benefits of a dedicated business account include:
- Cleaner records for tax and bookkeeping
- Easier reconciliation with accounting software
- Greater professionalism for clients, lenders, and HMRC
Look for accounts with low fees, instant alerts, and strong integrations. Challenger banks like Starling, Tide, and Monzo Business are popular among startups.
4. Choose the Right Accounting Software
Accounting software is a startup essential—not a luxury. It automates admin, supports compliance, and gives you real-time financial insight.
Key features to look for:
- Invoicing and payment tracking
- VAT returns (MTD-compatible)
- Expense management
- Payroll and pension support
Common choices include:
- Xero – Best for scalability and integrations
- QuickBooks – User-friendly with strong reporting
- FreeAgent – Great for solo founders and contractors
Choose one that fits your industry and integrates with your bank and accountant.
5. Register for VAT When the Time is Right
VAT registration is required when your rolling 12-month turnover hits £85,000. But registering early—voluntarily—can offer benefits:
- Reclaim VAT on business expenses
- Build credibility with B2B clients
- Prepare for future growth
Each VAT scheme (Standard, Flat Rate, or Cash Accounting) impacts your cash flow differently. A poor choice could leave you out of pocket—so get advice early.
See also: How Technology Has Changed the Music Industry
6. Track Expenses from Day One
Startups bleed cash fast. The only way to stay in control is to track spending from the beginning.
Typical deductible expenses include:
- Office supplies and laptops
- Marketing and ads
- Software subscriptions
- Travel, mileage, and client meals
Most accounting tools let you snap receipts, tag expenses, and log mileage from your phone. Do this regularly—it’s easier than trying to catch up at year-end.
7. Work With an Accountant Who Understands Startups
The right accountant does more than file returns—they help you grow smarter.
They’ll support you with:
- Choosing the best tax structure
- Filing VAT and payroll on time
- Avoiding HMRC penalties
- Interpreting your financial reports
Make sure your accountant has startup experience, knows your sector, and offers proactive advice—not just annual paperwork.
Bonus Tips for Startup Success
- Open a separate tax savings account: Set aside 20–30% of profits monthly for VAT and Corporation Tax.
- Automate your compliance calendar: Use tools to remind you about filings and deadlines.
- Run monthly financial reviews: Don’t wait for surprises—review your cash flow, margins, and unpaid invoices regularly.
- Plan ahead for growth: As your team or turnover grows, revisit your systems and structure with your accountant.
Final Thoughts
Starting a business in 2025 can feel like a whirlwind—but with the right accounting setup, you’ll be prepared to make smart decisions from day one. If you want expert support tailored to UK startups, Visit the Fusion Accountants website to explore how the right accounting partner can support your growth from day one.
They specialise in Small business accounting, in various sectors etc…—which makes them the kind of partner startups can rely on to stay compliant, efficient, and financially confident as they grow.
