Starting a business is undoubtedly exciting. However, you will quickly have to get to grips with your business finances and tax.
Running out of cash before your business gets going or falling foul of the rules on business expenses, tax reporting or VAT can spell the end of your fledgling business. The Money Donut is here to guide you through the potential minefield that is small business taxation and finance.
Our Money Donut top picks
To set you off on the right foot, we have selected some of our favourite content to get you started.
- The best UK business bank account: compare your options
- The best small business accounting software in the UK
- The best POS systems for small businesses
- Self employed national insurance
- Etsy, Vinted,eBay and Tax
- Find a lost National Insurance number
Get your finances and taxes right from the start with the Money Donut
Although it is possible to start a business on a shoestring budget, most start up businesses will require some financing to get off the ground or, at the very least, a cash reserve to cover the business owner's living expenses while the business gets established. There are many ways to finance a business, from self-funding to business grants or bank loans. Discover the options in the Finance section of the site.
You will need to decide what form your business will take - will you trade as a sole trader or limited company? This decision will depend on a number of factors, including how much personal risk you want to take. It will also impact which taxes you will have to pay - either income tax as a self employed person or corporation tax on behalf of the business. If you are going to trade as a sole trader (aka self employed or freelance), you will need to register as self employed with HMRC and complete a self assessment tax return.
Managing your finances will be easier and less stressful if you keep your personal and business finances separate. Some businesses are legally required to open a separate bank account. You should check if you are one of them. UK banks offer a wide range of accounts for businesses and many provide some great extras such as accounting software, free business registration or business planning tools. Before opening a bank account, it's worth checking out the options to find the right provider for you.
Subscribing to accounting software will also make the job of keeping an eye on your cash flow and submitting your tax returns a whole lot easier. Besides, Making Tax Digital will mean that you will have to report your self assessment tax digitally once you reach certain income thresholds or register for VAT. Read our guidance on Making Tax Digital for Income Tax and our essential guide to Making Tax Digital for VAT.
How to start your own business - free download
You can also download our free guide to starting a business. Packed with practical advice from small business owners who have been there and got the t-shirt, this guide will talk you through the key start-up tasks you need to complete.
Take your first steps with confidence. Our free guide breaks down the key tasks you need to complete into 16 simple steps and offers practical advice from real business owners who can offer first-hand advice from their personal start-up journeys.
Comprehensive resources for every aspect of your business
The Donut websites include Start Up Donut, Marketing Donut, Law Donut, Tech Donut, and Money Donut, offer free, practical advice tailored for small businesses in the UK. Here's an overview of how we can help you on your business journey.
Each Donut site focuses on a specific area crucial to small business success:
- Start Up Donut: Guides you through setting up your business, from choosing a business structure to registering as a sole trader or setting up a limited company.
- Marketing Donut: Provides strategies for building your brand, reaching customers, and effectively marketing your products or services.
- Law Donut: Offers insights into legal matters, including contracts, intellectual property, and employment law.
- Tech Donut: Helps you navigate technology choices, from selecting software to implementing cybersecurity measures.
- Money Donut : Assists with financial planning, small business banking, managing cash flow, and understanding tax obligations.
Small Business News: Get the latest need-to-know news and offers
The world can be a noisy place, with social media, news and instant messages constantly vying for attention. Cut through the chatter and stay up to date with the small business news and offers that matter to you by subscribing to our free, Donut Weekly newsletter.
Start Your Own Business podcast
If you prefer learning on the go, the Start Your Own Business podcast is an invaluable resource. Hosted by Fiona Prior, the podcast features interviews with successful business owners and industry experts, sharing their experiences and practical tips. Topics range from attracting investors to setting up an ecommerce business. Celebrating over 200,000 downloads and more than 50 episodes, the podcast has become a go-to for UK-based small business owners seeking inspiration and guidance.
Donut Small Business Collective: Join our supportive community
Running a small business can sometimes feel isolating, but you don't have to go it alone. The Donut Small Business Collective is our friendly and supportive Facebook group. It's a space where UK-based small business owners and managers can connect, share experiences, ask questions, and learn from each other. Members have access to exclusive Q&As with Donut experts, networking opportunities, and the chance to feature as 'business of the week'.
Ready to take the next step?
Whether you're just starting out or are looking to take your business to the next level, the Donut websites offer the tools, knowledge, and community support you need. Explore the resources available, tune into the podcast for expert insights, and join the Facebook group to connect with fellow business owners.
