What young entrepreneurs should know about accountancy

Are you a young entrepreneur or thinking of starting your own business? It’s very exciting and the perfect time to find out how an accountant can help you succeed. 

 

This might be the first and only time you set up a company but accountants do it often and know what’s involved. One of the first steps is to make sure your company is properly formed and registered. 

 

An accountant can guide you through the whole process and help you choose the right business structure. You might work as a sole trader, in a partnership, as a limited liability company (LLC), or limited company (Ltd). Each structure has its own legal and practical requirements. There are also legal and tax differences for each option. Your accountant can help you decide which best fits with your business goals and long-term plans. 

 

Once you have chosen the best structure your accountant can handle registration with HM Revenue and Customs (HMRC) and Companies House, if needed. This can include registering your company name, obtaining your company registration number, and making sure you meet the relevant regulations. Depending on your specific industry requirements your accountant can also tell you about any licenses or permits you’ll need. 

 

HMRC registration establishes your business for tax purposes so you’ll meet your legal and tax requirements. This might include: 

• VAT registration: You can choose to register for Value Added Tax (VAT) even if your turnover won’t reach the £90,000 turnover threshold for some time. 

• PAYE registration: Setting up a Pay As You Earn (PAYE) payroll system handles employee taxes and National Insurance contributions. 

• Self assessment registration: Sole traders and business owners need to file a Self Assessment Tax Return (SATR) and your accountant can help with registration, compliance and tax planning. 

 

Making sure your business is properly registered and compliant from the beginning helps you avoid potential penalties and possible legal issues. 

 

There are quite a few things that can influence your choice of business structure. 

• Liability. There’s a trade-off between the simplicity of working as a sole trader and the personal financial protection you have with different business structures. 

• Tax implications. Your tax obligations and the benefits associated with each business structure can help you manage and plan finances. 

• Ownership and control. There are different ways to set up your business ownership and how important decisions are made. Your accountant can explain the ‘pros and cons’. 

• Compliance and reporting. Different business structures have their own legal and regulatory requirements. You can discuss the benefits of a simple approach versus suitability for the future. 

• Business growth. There are some important considerations that can affect your future plans. For example, lenders often prefer to work with companies rather than sole traders. 

 

Overall, accountants can help you make informed decisions that fit with your plans. They can provide valuable insights and expertise to help young entrepreneurs manage the complexities of business life. 

 

There are other important services your accountant can provide as your business grows including bookkeeping, payroll management and tax planning. They can provide strategic financial advice, cashflow management, guidance on budgeting and forecasting. 

 

Your accountant can also advise you about the best accounting software so you can maintain accurate and reliable financial records from the very beginning. You can streamline financial management and have a clear view of your business's financial health. 

 

Profectus Accounting provides full-service accounting and bookkeeping services for brand new businesses and large organisations. If you’re a young entrepreneur with great business ideas please get in touch.