Business
Start-Up Advisory
Get the foundations right from day one. Company formation, the right business structure, tax planning, VAT registration and cloud accounting setup - all handled by ICAEW chartered accountants who work with start-ups across West London and Surrey every day.
The decisions you make in year one have consequences for years
Starting a business involves a series of decisions that feel administrative at the time but have real financial consequences over the long term. Choosing the wrong business structure, missing the VAT registration deadline, setting up payroll incorrectly or failing to keep proper records from day one can all cost significantly more to fix later than they would have cost to get right at the start.
The most common and expensive mistake is waiting too long to get proper accounting advice. Many founders spend the first year using a basic spreadsheet or a cheap online tool, only to discover at year-end that their records are incomplete, their expenses are not claimed correctly and their tax position is worse than it needed to be.
At Harnett and Co we work with new businesses from the very beginning. Whether you are moving from employment to self-employment, launching a product business, setting up a consultancy or taking over an existing business, we give you a clear picture of your options, the tax implications of each and the practical steps to get everything in place correctly.
Everything a new business needs to get set up properly
From the initial structure decision through to your first set of accounts, we cover every aspect of setting up and running a new business compliantly and tax-efficiently.
Limited company, sole trader or partnership - which is right for you?
The choice of business structure affects how much tax you pay, your personal liability if things go wrong, how you can bring in partners or investors, and how your business is perceived by clients and suppliers. There is no universally correct answer - the right structure depends on your income level, your risk profile, whether you have co-founders and your plans for the business.
As a general guide, a limited company becomes more tax-efficient than sole trader status once profits reach approximately £30,000 to £40,000 per year, though the exact crossover depends on your personal circumstances. The corporation tax rate is 19% to 25% depending on profit level, compared to income tax rates of up to 45% on sole trader profits. However a limited company also carries more administrative obligations and costs.
We model the tax position under each structure for your specific circumstances so the decision is based on numbers, not guesswork. Most of our start-up clients choose to incorporate as a limited company, but we always recommend the structure that is genuinely right for each individual situation.
Getting the tax structure right from month one
For a new limited company director, the most impactful tax planning decision is how to split income between salary and dividends. Dividends are taxed at lower rates than salary (8.75% for basic rate taxpayers versus 20% income tax) and are not subject to National Insurance, which applies to salary at 8% employee and 15% employer from April 2025.
The optimal director salary for 2025/26 is £12,570, equal to the personal allowance. This means no income tax on the salary and, where the Employment Allowance is available, no National Insurance either. Profits above the salary can then be extracted as dividends, using the dividend allowance of £500 before dividend tax applies.
Pre-trading expenses incurred before the company was incorporated can also be claimed as allowable deductions, provided they were incurred for the purpose of the business. These are frequently overlooked but can include equipment, software, training courses and professional fees paid before the company started trading.
From first conversation to fully set up in weeks, not months
We make the process of starting properly as straightforward as possible so you can focus on the business from day one.
Initial consultation
We discuss your plans, the nature of the business, your personal tax position and your longer term goals. No obligation and no charge for the initial meeting.
Structure and tax advice
We recommend the right structure, model the tax position and propose the optimal salary and dividend strategy. All explained clearly with numbers.
Formation and registrations
Company formed at Companies House and all HMRC registrations completed. You receive confirmation of all reference numbers and first filing deadlines.
Accounting setup
Cloud accounting software configured, bank feed connected, chart of accounts set up and basic training provided so you can start recording transactions immediately.
Ongoing support
VAT returns, payroll, annual accounts and corporation tax handled throughout the year. You have a named accountant to call whenever you have a question.
The mistakes we see most often - and how we help you avoid them
Most accounting problems in young businesses come not from dishonesty or negligence but from simply not knowing what the rules are. HMRC has limited patience for errors made out of ignorance, and penalties for late filing or incorrect returns apply regardless of whether the mistake was deliberate.
The cost of getting proper advice at the start is almost always a small fraction of the cost of correcting problems later. A missed VAT registration, an incorrectly structured shareholder agreement or two years of underclaimed expenses can each cost thousands of pounds to resolve.
We have worked with hundreds of new businesses across West London and Surrey and the same issues come up repeatedly. Most of them are entirely avoidable with the right setup and a basic understanding of the rules.
Start on cloud accounting - do not migrate to it later
The single best thing a new business can do from an accounting perspective is start on proper cloud accounting software from day one. It is significantly harder and more expensive to migrate historical records onto a cloud platform after two or three years of spreadsheet-based bookkeeping than it is to set it up correctly at the beginning.
Cloud accounting gives you real-time visibility of income, expenses and VAT position. Bank feeds import transactions automatically, reducing manual data entry and the risk of errors. MTD for Income Tax, which comes into effect in April 2026 for sole traders and landlords with income over £50,000, requires compatible software anyway.
We set up whichever platform suits your business, connect your bank feeds, build your invoicing templates and show you the basics in a short walkthrough session. Most clients are using it confidently within a week of setup.
Start-up advisory questions answered
Get the foundations right from day one
Talk to us before you commit to a structure or start trading. A short conversation at the beginning can save significant time and money over the first few years of the business.