Tax considerations in the first 100 days of business
Starting a business in the UK comes with various tax responsibilities that must be addressed within the first 100 days to ensure compliance and avoid penalties. This critical period is essential for setting up tax structures correctly, managing financial records, and understanding obligations to HMRC. You should open a business bank account and determine what system and software options are required to help run the business successfully.
Registering for Taxes
New businesses must register with HMRC within three months if they are self-employed or operating as a partnership. For limited companies, registration with Companies House automatically notifies HMRC:
- Register for VAT if turnover exceeds £90,000 (2025/26 threshold) or voluntarily register for benefits such as reclaiming VAT on expenses
- Set up PAYE (Pay As You Earn) if hiring employees, ensuring correct tax deductions from salaries. Make sure you register with HMRC as an employer and add PAYE services to your Government Gateway account
- Consider Corporation Tax if operating as a limited company (currently 19%-25% depending on profits)
Understanding Tax Deadlines
Within the first 100 days, businesses should be aware of key tax deadlines:
- Self-Assessment Registration – Must be done by 5 October following the first tax year of business
- VAT Registration – If required, must be completed within 30 days of exceeding the threshold. The threshold is not based on your accounting year, it is based on 12 months rolling basis
- Corporation Tax – Payment is due nine months and one day after the company’s accounting period ends, but the business must register within three months of starting
Record-Keeping and Accounting
Proper bookkeeping is essential from day one. You can use a cloud accounting software solution such as FreeAgent, QuickBooks Online or Xero that automate tax tracking and reporting. These can be supported by third-party applications to add functionality to your record keeping like payment solutions.
Businesses should maintain records of:
- Income and expenses for tax calculations
- VAT invoices (if VAT registered)
- Payroll information for PAYE compliance
Claiming Business Expenses and Reliefs
New businesses can reduce their tax liability by claiming allowable expenses, such as:
- Office costs (rent, utilities, equipment)
- Travel expenses (mileage, transport)
- Staff wages and pensions
- Training and professional development
Tax reliefs such as Annual Investment Allowance (AIA) allow businesses to deduct the cost of equipment purchases up to £1 million.
Preparing for HMRC Compliance
New businesses may face tax audits or compliance checks from HMRC. To minimise risks:
- Keep accurate records and receipts
- Submit returns on time to avoid penalties
- Seek professional advice from a qualified accountant or tax adviser
Conclusion
The first 100 days of business are crucial for setting up tax compliance correctly. Understanding tax responsibilities, meeting deadlines, and maintaining accurate records will help businesses avoid fines and operate smoothly. Seeking professional guidance can further ensure tax efficiency and long-term success.
If you need advice on any of the tax-related areas covered, or if you require support with online accounting software and payroll bureau services, please email info@thomsoncooper.com to arrange a free initial consultation.