Start-up Accountants Manchester
If you’ve decided to take the plunge into self-employment, you will probably know your industry like the back of your hand. Overseeing accounts, tax and your finances, however, probably wont be the most favourite of tasks for a business owner. It can be a minefield, frustrating, and rob you of valuable time that could be spent growing and developing your business.
Having experienced chartered accountants on board from the get-go will no doubt be a valuable asset in the early stages of starting your business. Quay Accountants can offer valuable advice and accounting services to support your new business in the early days and help you to fulfil your potential for growth.
Quay Accountants works with ambitious start-ups in Manchester to help them establish a strong financial foundation on which to realise their vision.
From advice on funding, business plans and company formation in the early days, we can extend our services to include accounting tasks like payroll and bookkeeping as your business grows.
As your dedicated accountant, we can also help you with your VAT returns and offer a valuable tax service to ensure you stay compliant and retain as much of your profit as possible.
We would love to talk to you about your new venture. To book a free accounting consultation, please get in touch.
What classes as a start-up business?
A start-up is a small business in its early stages that is set up by entrepreneurs to bring a product or service to market. Start-ups differ from regular small businesses in that they are concerned with innovation and developing a unique product offering. In creating a new market, a start-up is scalable and has huge potential for growth.
What business structure is best for a start-up?
The simplest and most common way to start up a business is as a sole trader. There is minimal paperwork, but you do have obligations to fulfil to HMRC every year in the form of a self-assessment tax return.
As a sole trader, it’s important to remember that you are your business from a legal perspective and therefore are liable for any debts or legal action that your business incurs. So your personal assets could be at risk if you run into financial trouble.
Alternatively, you can launch your business as a limited company, giving you limited liability, i.e., personal protection from the company’s debt. Limited companies pay Corporation Tax and have obligations to fulfil to Companies House, as well as HMRC.
If you are starting a business, then Quay Accountants can offer you valuable advice on which business structure is right for you. We’ll talk you through the pros and cons and ensure you understand your tax liability. Find out more about our tax services.
What tax do start-ups pay?
Whatever business structure you choose, you have an obligation to HMRC to pay tax. It’s crucial that you understand your tax liability and legal obligations, as any mistakes or late submissions can end in costly fines and even legal action.
Sole traders must submit self-assessment tax returns each year. The amount of tax you pay is determined by the amount of profit you make, and your level of income in the financial year (the basic rate is currently 20%). You can deduct allowable business expenses from your turnover, and you’ll pay tax on any profits which exceeds the tax-free personal allowance of £12,570. In addition to income tax, sole traders will also need to make National Insurance Contributions.
There are two types of National Insurance Contributions to take into account:
Class 2 NICs
Class 4 NICs
If a sole trader has a taxable turnover of over £85,000 in a rolling 12 month period, you must also register your business for VAT. This will mean that VAT is added to all your invoices to your customers, but you can also reclaim the VAT you have paid on business expenses.
Limited companies must file a Corporation Tax return with HMRC and also submit their year-end statutory accounts to Companies House. Corporation Tax is paid to HMRC out of any profits your business has made, which is taxed at a rate of 19%, if your company profits are £50,000 or less, or 25% for profits above this level (as of 2023).
Like sole traders, Limited Companies must also register for VAT if they have a taxable turnover of over £85,000 in a 12 month rolling period.
Most limited company directors pay themselves through a combination of a low salary and dividends. Depending on how much salary you draw, your company might have to pay Employer’s National Insurance. You can avoid paying this if you pay yourself just below the threshold for National Insurance (In 2022/23, this is £9,100 a year).
To top up the income received by a salary, most directors make up the difference by paying themselves dividends. These are paid from company profits after paying corporation tax. You will not have to pay any dividend tax on the first £2,000 of dividend income in a single tax year (From 2023/24, this is £1,000). Any dividend income above this sum will be subject to dividend tax.
Tax relief for small businesses
There are certain tax reliefs and credits that you may be entitled to, so it’s wise to talk to your accountant to see if there are ways to save. For example, you may be eligible for Research and Development tax relief if your R&D activities benefit your industry as a whole. This can be a valuable source of funding in the early days.
Quay Accountants can offer valuable tax advice to help minimise your tax bill and support in preparing annual tax returns. To find out how we can save your company money and time, please get in touch.
Our start-up business accounting services in Manchester
We can offer a range of services to help you to establish sound financial processes and give your venture the best chance of success.
Raising finance is usually the most pressing concern for a new venture. As your dedicated accountant, Quay Accountants can provide advice on preparing a persuasive and credible business plan and make recommendations to funding providers.
If you opt to launch as a limited company, we can help you with company formation. We’ll take care of all the relevant documentation and make sure you understand your new legal and tax position, so you can begin trading as soon as possible.
Bookkeeping is fundamental to running a successful business, but let’s face it, it isn’t the most exciting of activities and it is a time stealer. By outsourcing your bookkeeping to an accountant, we can manage your financial data (such as customer and purchase invoices) and ensure your bank, cash and control accounts are reconciled. We will also keep an eye out on your turnover to make sure you don’t go over the VAT threshold. You can rest easy and focus on your business, knowing your books are in professional hands.
Cloud accounting software
Cloud accounting software such as Xero is the new industry standard and has revolutionised the way small businesses manage their accounts. Xero is real-time and available on any device, meaning you always have an accurate view of your finances. It is easy to use and has a number of helpful add-ons to help manage and automate your business. Xero can be linked to your business bank account so that all of your business transactions are transferred automatically, saving you time and hassle.
Most start-ups rely on employees to get their new product or service off the ground, so you will need to implement payroll and ensure you pay salaries accurately and on time. As an employer, you must register for PAYE and ensure you calculate NI contributions accurately. This makes the administration of monthly payroll complex and time-consuming, which is far from ideal when you’re trying to run a new business.
That’s why many of our clients opt for our outsourced payroll services.
A good grasp of tax legislation is essential to avoid incurring penalties from HMRC, which could spell disaster for your new business. Our tax services include advice on tax-deductible expenses and other tax reliefs, as well as the accurate and timely filing of your personal or company tax return. If you are registered for VAT, we can also help you to submit your VAT returns in line with Making Tax Digital.
Monthly management accounts
Monthly management accounts are crucial to start-ups to give them a clear view of their numbers and help guide strategic decisions. We can produce valuable financial reports on a monthly or quarterly basis to suit the needs of your business, including profit and loss reports and a balance sheet.
Why choose Quay Accounting?
We are a dynamic and forward-looking team of accountants that thrive on helping start-ups in Manchester hit the ground running and keep on going. If you choose to work with us, you’ll be allocated your own dedicated accountant to provide support throughout your journey, from putting together your initial business plans to providing insight and analysis to take your business to the next level.
We can offer you an affordable monthly accounting package based on your needs, to evolve as your business matures. To arrange a free consultation to discuss your start-up accounting needs, please get in touch.
Start-up Business Accounting - Frequently Asked Questions
What are start up costs?
Startup costs are the expenses that a business incurs before beginning operations. This includes any costs associated with setting up shop, such as equipment, inventory, and payroll. It's wise to set up a dedicated business bank account for all transactions to make it easier to keep on top of costs.
Why do start-ups fail?
It's thought that around 60% of start-ups in the UK fail. This is due to a variety of reasons, such as lack of funding and under/overvaluing the market. To be a successful business, it's essential for a start-up to be agile and have the ability to pivot to meet the demands of the market - which relies on efficient accounting.
Do start-ups pay dividends?
If the business is structured as a limited company, it is able to declare dividends to shareholders from its profit after tax. However, in the early days of a start-up, it's rare to declare dividends, as any profit is most likely to be reinvested in the business to help it scale.
Contact Us Today
Whether you are local to Manchester or based further afield, we can ensure that your tax returns are submitted correctly and with no penalties incurred. Plus with our many decades of experience our expert team of Chartered Accountants allows us to offer a dedicated self-assessment service so that we can handle even the most complex cases on your behalf.
To find out more about then services we offer, get in touch with our tax return accountants today!