Starting a Business in 2025? Your Step-by-Step Accounting Checklist for UK Startups

The road to launching a successful startup is exciting—but it can also be chaotic. With 2025 bringing new tax rules, digital compliance requirements, and increased competition, founders need more than a great idea—they need a solid financial setup from day one.
This guide provides a practical checklist designed specifically for new UK startups to manage their accounting with clarity and confidence.
1. Choose the Right Legal Structure
Your legal structure affects tax, liability, and future funding opportunities.
- Sole trader: Easier setup and fewer regulations, but you’re personally liable for business debts.
- Limited company: Offers liability protection and tax flexibility, though more paperwork and regulations apply.
The structure you choose will impact your ability to hire, raise investment, and access grants or loans—so speak with an expert before you commit.
2. Register with HMRC or Companies House
Once you’ve chosen your structure:
- Sole traders: Register with HMRC for Self Assessment. You’ll file your income tax annually and keep records of your business finances.
- Limited companies: Register with Companies House. You’ll need to submit your:
- Articles of Association
- Shareholder and director details
- Company name and address
This step also initiates your Corporation Tax registration. Timeliness matters—register within three months of starting business activity to avoid penalties.
3. Open a Business Bank Account
Your business finances should never be mixed with personal spending. Opening a dedicated business account will help:
- Keep your records clean for tax purposes
- Simplify cash flow monitoring
- Streamline software integrations
- Build trust with clients and suppliers
Online banks like Tide and Starling are startup-friendly, offering modern interfaces and accounting software integrations.
4. Choose the Right Accounting Software
A spreadsheet won’t cut it when your startup begins to grow. The right accounting software helps with:
- Invoicing and cash flow monitoring
- VAT compliance and MTD (Making Tax Digital)
- Payroll setup
- Real-time reporting and mobile access
Popular options include Xero, QuickBooks, and FreeAgent. Choose based on your business type and preferred features. Some software providers even offer discounts for new businesses.
5. Understand VAT and When to Register
You must register for VAT if your taxable turnover exceeds £85,000 within any 12-month rolling period. However, voluntary registration can benefit many startups by:
- Allowing VAT reclaims on eligible expenses
- Improving business credibility with clients
- Preparing your systems for future compliance
Make sure you understand the difference between the Standard, Flat Rate, and Cash Accounting schemes—each affects your VAT liability and cash flow differently.
6. Track Expenses from the Beginning
Startup spending adds up fast. Tracking expenses from the beginning ensures that you:
- Don’t miss deductible costs
- Avoid surprises at tax time
- Maintain financial clarity as you grow
Log costs like:
- Business software
- Advertising and marketing
- Travel and fuel
- Office equipment
Use cloud-based accounting software to digitise receipts and categorise expenses in real time. This helps you stay compliant and saves hours during year-end filing.
7. Work With a Startup-Savvy Accountant
Even with software, an experienced accountant is essential for navigating tax, growth, and compliance. A great accountant will:
- Advise on your business structure
- Handle VAT and payroll filings
- Help you claim startup reliefs
- Guide you with budgeting and forecasting
Startups businesses in London trust Fusion Accountants when launching their business because they understand the pressure of the first year and provide clarity through personalised support.
Bonus Tips for Startup Success
- Create a tax buffer: Set aside 20–30% of income for Corporation Tax, VAT, and Self Assessment bills.
- Automate your alerts: Use accounting tools or calendar systems to track key deadlines.
- Schedule financial reviews: Run monthly check-ins with your accountant or finance partner.
- Adapt your setup: Revisit your accounting tools and processes every 6–12 months as your business evolves.
Final Thoughts
Starting your business in 2025 is both rewarding and challenging. With a clear accounting process, the right tools, and expert guidance, you can avoid common mistakes and grow with confidence.