First-Year Accounting Checklist for New UK Businesses

This checklist is tailored to businesses operating in the United Kingdom, including sole traders, partnerships, and limited companies.

Before You Start Trading

Business Registration

• Register as a sole trader with HM Revenue & Customs (if applicable).

• Register your limited company with Companies House (if applicable).

• Obtain your Unique Taxpayer Reference (UTR).

• Set up a business bank account.

• Register for PAYE if you will employ staff.

• Assess whether you need VAT registration (mandatory once taxable turnover exceeds the current threshold).

Accounting Setup

• Choose accounting software (e.g., Xero, QuickBooks, or FreeAgent).

• Create a chart of accounts.

• Decide whether to use cash basis or traditional accounting (where eligible).

• Set up digital record-keeping processes.

• Establish a system for storing receipts, invoices, contracts, and bank statements.

Tax Planning

• Understand Corporation Tax obligations (limited companies).

• Understand Self Assessment requirements (sole traders and some directors).

• Determine VAT obligations.

• Understand dividend vs salary considerations (limited companies).

• Engage an accountant if needed.

Monthly Tasks

Bookkeeping

• Record all income and expenses.

• Upload and retain receipts and invoices.

• Reconcile business bank accounts.

• Reconcile credit cards.

• Review aged debtors (customers who owe money).

• Review aged creditors (suppliers you owe).

Financial Management

• Review cash flow position.

• Check profitability.

• Monitor budget vs actual performance.

• Ensure sufficient funds for upcoming tax liabilities.

VAT (if registered)

• Verify VAT treatment of transactions.

• Review VAT on purchases and sales.

• Check Making Tax Digital (MTD) records are complete.

Payroll (if applicable)

• Process payroll.

• Submit Real Time Information (RTI) filings to HMRC.

• Pay PAYE and National Insurance contributions.

• Maintain pension auto-enrolment records.

Quarterly Tasks

VAT Returns

• Prepare and submit VAT returns.

• Pay VAT due by the deadline.

• Review VAT control accounts.

Business Review

• Analyse revenue trends.

• Review gross profit margins.

• Assess major expense categories.

• Update forecasts and cash flow projections.

Compliance Review

• Verify bookkeeping accuracy.

• Review director's loan accounts (if applicable).

• Ensure payroll records are complete.

Mid-Year Review (Month 6)

Financial Health Check

• Review profitability.

• Assess cash reserves.

• Evaluate pricing and margins.

• Review debtor collection processes.

• Check whether VAT registration is approaching.

Tax Planning

• Estimate Corporation Tax liability.

• Estimate Self Assessment liability.

• Consider pension contributions and other tax-efficient planning opportunities.

Year-End Tasks

Close the Books

• Reconcile all balance sheet accounts.

• Review accruals and prepayments.

• Verify fixed assets and depreciation.

• Review inventory (if applicable).

• Check outstanding invoices and liabilities.

Limited Company Requirements

• Prepare annual accounts.

• File annual accounts with Companies House.

• Submit Company Tax Return (CT600) to HMRC.

• Pay Corporation Tax by the deadline.

• File the Confirmation Statement with Companies House.

Sole Trader Requirements

• Prepare year-end accounts.

• Complete and submit Self Assessment tax return.

• Pay Income Tax and National Insurance.

• Make payments on account where required.

Employment Requirements

• Issue P60s to employees.

• Complete any required payroll year-end submissions.

• Review pension auto-enrolment obligations.

Important UK Deadlines to Track

Limited Companies

• Corporation Tax payment: usually 9 months and 1 day after year-end.

• Company Tax Return (CT600): usually within 12 months of year-end.

• Annual accounts filing deadline.

• Confirmation Statement deadline.

Sole Traders

• Self Assessment filing deadline.

• Self Assessment payment deadline.

• Payments on account deadlines (where applicable).

VAT Registered Businesses

• VAT return deadlines.

• VAT payment deadlines.

Employers

• Monthly PAYE/NIC payments.

• Payroll year-end deadlines.

Ongoing Best Practices

• Keep personal and business finances separate.

• Maintain digital records throughout the year.

• Set aside money monthly for tax liabilities.

• Reconcile accounts every month.

• Review key financial reports regularly.

• Back up accounting records securely.

• Stay compliant with Making Tax Digital requirements where applicable.

• Consult an accountant before major financial decisions.

Key Metrics to Monitor

• Monthly turnover

• Gross profit margin

• Net profit margin

• Cash balance

• Debtor days

• Creditor days

• VAT liability

• Tax reserve balance

• Monthly recurring expenses

• Operating cash flow

This checklist is suitable for most UK small businesses and startups, though regulated industries and larger companies may have additional compliance requirements.

Need advice on how to proceed?

Contact Foxmain Associates for a personalised review of your business and any assistance that you may require to get up and running.