Starting a new business is exciting, but it is also one of the most financially vulnerable stages of any company’s life. Many startups do not fail because the idea is wrong, they fail because the foundations were not put in place early enough, particularly around cash flow, compliance, and planning.
This new business starter checklist is written for UK startups and acts as a practical starting a business checklist UK founders can rely on. Whether you plan to trade as a sole trader or set up a limited company, these steps will help you avoid common mistakes and build a business that is financially stable and compliant from day one.
Choose the Right Business Structure
The structure you choose affects tax, liability, and cash flow from the outset.
The most common options are:
- sole trader
- limited company
This decision affects:
- how much tax you pay
- your personal liability
- how you take money out of the business
- your cash flow flexibility
Many startups rush this decision or rely on informal advice. Changing structure later can be costly and disruptive, so it is worth getting this right at the outset.
If you decide to form a limited company, you will need to register with Companies House and understand your responsibilities as a director from day one.
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Register with HMRC at the Right Time
Correct registrations prevent penalties and unexpected tax bills.
All new businesses must register with HMRC, but what you register for depends on how you operate.
This may include:
- Self Assessment
- Corporation Tax
- PAYE if you plan to pay yourself or staff
- VAT, if applicable
Registering late or incorrectly can lead to penalties and cash flow pressure in the first year of trading.
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Open a Separate Business Bank Account
Separating finances makes cash flow and compliance easier to manage.
A dedicated business bank account helps you:
- track income and expenses accurately
- understand your true cash position
- manage tax and VAT
- keep records HMRC will accept
For limited companies this is mandatory, but it is also best practice for sole traders.
Set Up Bookkeeping and Accounting Software Early
Early systems give you visibility and control.
Cloud accounting software such as Xero allows you to:
- monitor cash flow in real time
- issue invoices promptly
- chase overdue payments
- see what money is actually available
Delaying this often leads to poor decisions and avoidable cash flow problems.
Put Cash Flow at the Centre of Your Planning
Most startups fail due to cash flow, not lack of profit.
Cash flow for new business owners is often misunderstood. You can be profitable on paper and still struggle to pay bills if money arrives late or costs rise unexpectedly.
Every startup should:
- understand regular monthly outgoings
- know when income is likely to be received
- build a buffer for quieter periods
- avoid committing to fixed costs too early
A simple cash flow forecast highlights pressure points in advance and gives you time to act.
Read our useful blog
Understand How You Will Pay Yourself
Taking money without a plan can damage cash flow quickly.
“How do I take money out of my business?” is one of the most common questions new business owners ask.
You may take money via:
- drawings
- salary
- dividends
- a combination
The right approach depends on your structure and tax position.
Plan for Your First Tax Bill in Advance
Tax bills arrive later than expected, planning avoids panic.
Your first tax bill often arrives long after the income has been spent.
Good planning means:
- estimating liabilities early
- setting money aside regularly
- understanding payment deadlines
Tax should be a planned cost, not a surprise.
Keep Proper Records From Day One
Good records protect your cash and reduce stress.
Accurate records help you:
- claim allowable expenses
- avoid overpaying tax
- respond confidently to HMRC
- understand performance
Poor records almost always cost more in the long run.
Know When to Speak to an Accountant
Early advice saves money and avoids mistakes.
A common question is, do I need an accountant when starting a business?
While not legally required, early advice helps with:
- compliance, ensuring registrations and deadlines are correct
- planning, particularly tax and cash flow
- avoiding costly mistakes in the first year
- setting up systems that grow with the business
Just as importantly, a good accountant provides ongoing communication. When starting a business, questions come up constantly, some big, some very small. Having someone available to answer questions as they arise gives confidence and clarity at a critical stage.
Get Ongoing Support as Your Business Grows
Your needs change as the business develops.
Working with an accountant who supports small and medium-sized businesses across Surrey and Sussex ensures advice is practical, timely, and relevant to your stage of growth.
Frequently Asked Questions About Starting a Business
Cash Flow Questions
What is the best way to manage cash flow for a new business?
Track income and expenses regularly, invoice promptly, plan for tax, and review cash flow monthly. Forecasting helps identify issues before they become serious.
How do I know if my startup has a cash flow problem?
If you struggle to pay bills despite making sales or rely on overdrafts regularly, cash flow may be the issue.
Tax and Compliance Questions
Do I need an accountant when starting a business?
Not legally, but many startups use one early to manage compliance, cash flow, and planning.
What records does a new business need to keep?
Income, expenses, bank transactions, and supporting documents.
Setup and Planning Questions
What should be in a new business starter checklist?
Business structure, registrations, bookkeeping setup, cash flow planning, tax preparation, and professional support.
Should a startup use accounting software from day one?
Yes. Early setup improves accuracy, cash flow visibility, and compliance.
Final Thoughts
Starting a business is not just about having a good idea, it is about building strong financial foundations.
By following this new business starter checklist and focusing on cash flow, compliance, and planning from the outset, you give your startup the best possible chance of long-term success.
If you are starting a business and want clear, practical advice, speaking to an accountant early can make all the difference.