Starting a new business is exciting – but let’s be honest, managing the finances can feel like a bit of a minefield. You’re not alone if you find accounting overwhelming. In fact, over a quarter (26%) of small business owners say they have little to no accounting knowledge.
That’s where we come in. At Amanah Accountants, we’re here to help you make sense of your numbers – and your obligations – from day one. In this guide, we’ll walk you through the key steps to setting up and running a financially healthy business, including:
Choosing the right business structure
Registering with the right organisations
Managing your accounts and keeping accurate records
Our top accounting tips for small business success
Let’s get started.
1. Setting Up a Business: What Structure is Right for You?
Choosing the right legal structure is one of the first and most important decisions you’ll make. Here are the three most common options in the UK:
Sole Trader
This is the simplest and most popular structure. You run the business as an individual, keep all profits (after tax), and are personally responsible for any debts.
✅ Easy to set up
✅ Great for freelancers and solo entrepreneurs
❗ Your business and personal assets are not separate
You’ll need to register with HMRC and submit a Self Assessment tax return annually.
Limited Company
A limited company is its own legal entity. That means your personal assets are protected if the company gets into debt.
✅ Limited liability protection
✅ May offer tax advantages
❗ More admin: you must register with Companies House, file annual accounts, and pay Corporation Tax
Partnerships & LLPs
If you’re starting a business with others, a partnership might suit. You’ll share ownership and responsibilities.
There are three main types:
General partnership – easy setup, shared responsibility
Limited partnership – combines active and silent partners
Limited Liability Partnership (LLP) – popular with professionals like solicitors and accountants
2. Trading Status and Banking – Who You Need to Tell
Starting to trade? Make sure you let the relevant authorities know.
✅ Sole Traders & Partnerships
Register with HMRC for Self Assessment and Class 2 National Insurance.
AJ suggests calling HMRC early in the morning to avoid long hold times. You’ll receive your Unique Taxpayer Reference (UTR) in the post.
✅ Limited Companies
Register your business with Companies House and notify HMRC within 3 months for Corporation Tax.
You’ll receive a company UTR and an authentication code – essential for managing company info online.
✅ Open a Business Bank Account
Even though sole traders aren’t legally required to have one, we highly recommend keeping personal and business finances separate.
Limited companies must have a separate business account, as the company is a legal entity.
3. Bookkeeping & Record Keeping: Why It Matters
Proper record-keeping is the foundation of good financial management. Gone are the days of paper ledgers – we recommend using digital accounting tools such as:
Xero
QuickBooks
Sage
FreeAgent
These platforms help track:
Who owes you money
What bills need paying
Your business cash flow and financial health
📘 A Quick Bookkeeping Glossary:
Profit and Loss (P&L): Revenue vs expenses over time
Cash Flow Forecast: Your future money in vs out
Balance Sheet: Snapshot of assets, liabilities & equity
Accounts Receivable: Money customers owe you
Accounts Payable: Money you owe others
4. Top Tips for Staying on Top of Your Business Finances
A few good habits can make all the difference:
✅ Check Your Accounts Regularly
Look at your books weekly or monthly – don’t rely on your bank balance alone.
✅ Plan for Your Tax Bill
Set aside money for taxes every time you get paid. Avoid last-minute scrambles by staying ahead of your tax deadlines.
An accountant can help you identify deductions and reduce your tax bill – legally and efficiently.
✅ Don’t Just File Your Accounts – Analyse Them
Your P&L and balance sheet can reveal insights:
What products or services are driving profit?
Where could you cut costs or invest for growth?
Your numbers are a story. Read them.
Need Help? We’re Here for You
At Amanah Accountants, we specialise in helping start-ups and small businesses succeed with tailored, honest financial advice. Whether you’re setting up as a sole trader or scaling a growing company, we’ll help you build a strong financial foundation.
Want to speak to one of our advisors? Contact us today or drop by our office for a chat.
Disclaimer: This article is for general information only and should not be taken as legal or financial advice. Always seek professional support tailored to your specific situation.
