Thinking of Starting a Business in the North-East? 🚨 Read This Before You Take the Plunge

Some Starting Considerations...

Got a business idea? Thinking about going self-employed? Or perhaps you've finally decided it's time to turn that side hustle into something a little more serious?

Starting a business can be exciting but it can also involve an impressive number of questions.

Sole trader or limited company?

How much tax will I pay?

Do I need to register with HMRC?

What expenses can I claim?

Do I need a business bank account?

And, perhaps most importantly…

Where do I actually start?

If you're starting a business in Durham or anywhere across the North East, getting the foundations right from the beginning can save you a lot of hassle later.

Here's what we'd think about before getting started...

1. Start with the business — not the paperwork

Before worrying about tax returns and spreadsheets, get clear on what you're actually trying to build. Are you starting:

• A plumbing, electrical or other trade business?

• A property development business?

• A consultancy?

• An online business?

• A professional service?

• A retail or hospitality business?

• A creative or digital business?

• A side hustle that you're hoping will become your full-time income?

Your business type can influence the most appropriate structure, tax considerations and record-keeping requirements. And if you're starting a business anywhere there may be a temptation to think: "I'll just get started and sort the tax stuff out later."

We'd strongly recommend doing at least some planning before you start taking money.

2. Sole trader or limited company?

This is one of the first big decisions for a new business owner is choosing the right structure. For many people starting out, the choice will be between becoming a sole trader or setting up a limited company.

A sole trader is generally the simpler structure. You are personally responsible for the business and its debts, and your profits are generally taxed through your Self Assessment tax return.

A limited company is legally separate from its owners and comes with additional responsibilities, including company accounts, Corporation Tax and Companies House obligations.

So which one is better? There isn't a universal answer.

And this is one of those decisions where getting advice early can be much better than discovering six months down the line that you chose a structure that isn't particularly suitable for your circumstances. Your expected profits, plans for growth, how you intend to take money from the business and your personal circumstances can all be relevant in this situation.

Starting a business doesn't mean you automatically need to form a limited company. If you're operating as a sole trader, you may need to register for Self Assessment.

HMRC currently says you must register as a sole trader if you earn more than £1,000 in a tax year, although there are circumstances where you may need or want to register for other reasons. You'll also need to keep appropriate records so you can work out your profits and complete your tax return.

And this is where a little bit of forward planning can make life much easier.

3. Keep your business money separate

Here's a simple one. Don't mix everything together if you can avoid it.

Having a separate bank account for your business can make it much easier to keep track of:

✅ Money coming into the business

✅ Business expenses

✅ What you've paid yourself

✅ Your actual business performance

✅ Information you'll eventually need for your accounts and tax return

It also means you're not scrolling through your personal bank statement wondering why you bought something six months ago and whether it was actually for the business. We've all been there. 😬

4. Keep records from day one

You don't need a complicated finance department when you're starting a small business. But you do need to know what money is coming in and going out.

Keep records of your:

• Sales and income

• Business expenses

• Invoices

• Receipts

• Bank transactions

• Mileage where relevant

• Business assets and equipment

• Other financial information relevant to your business

HMRC requires businesses to keep records, and good records can also make it much easier to understand whether your business is actually making money. And there's a big difference between: "I think I'm making money." and "I know exactly how much profit I've made."

The second one is considerably more useful.

5. Understand your expenses

One of the questions we hear regularly from new business owners is: "Can I claim that as a business expense?" The answer isn't always as simple as yes or no. It depends on what you've bought, why you've bought it, how it is used and the rules that apply to your particular business and tax position.

That could include things such as:

• Professional subscriptions

• Business insurance

• Accountancy fees

• Equipment

• Software

• Advertising and marketing

• Business travel

• Office costs

• Professional services

Don't simply assume that because something helps your business, it is automatically deductible. And equally, don't assume that you can't claim something simply because you're working from home.

This is an area where proper advice can pay for itself.

6. Think about tax before the first bill arrives

This is one of the biggest mistakes new business owners can make. You receive £5,000 into your business account. It feels like you've made £5,000. But that's not necessarily your profit — and it certainly doesn't mean you should spend every penny. As your business grows, you need to understand:

Income → expenses → profit → tax

rather than simply looking at what's sitting in your bank account.

Planning for tax throughout the year can be much less painful than discovering at the end of the tax year that you have a surprisingly large bill.

7. Don't wait for your business to get 'big enough' to seek advice

There's a strange idea that accountants are something you need once your business becomes successful. We'd argue the opposite.The earlier you understand what you're doing, the easier it can be to build good habits. That doesn't mean you need to pay for every possible service on day one. But getting advice about things such as:

• Your business structure

• Tax registration

• Record keeping

• Expenses

• Tax planning

• Bookkeeping

• VAT

• Future growth

can help you avoid mistakes that become much harder to fix later.

8. Secure the support that suits you and your business best

Starting a business in the North-East? Think local. Durham has a huge range of businesses — from tradespeople and independent retailers to consultants, property businesses, contractors, professional services and growing SMEs. And that's exactly why we don't think accounting advice should be completely generic.

At North East Accounting, we're focused on supporting businesses across Durham and the wider North East — from people taking their first steps into self-employment through to established businesses looking to grow.

Thinking of starting a business? Here's our simple checklist

Before you get started, ask yourself:

✅ Have I decided what my business is actually going to do?

✅ Have I considered sole trader vs limited company?

✅ Do I know whether I need to register with HMRC?

✅ Have I thought about how I'll keep records?

✅ Do I have a system for tracking income and expenses?

✅ Am I keeping business and personal finances separate?

✅ Do I understand what tax I may need to pay?

✅ Am I putting money aside for my tax bill?

✅ Have I considered whether VAT could become relevant?

✅ Have I taken professional advice where I need it?

You don't need to have every answer before you start. But you do need to know what questions you should be asking.

Starting your Durham business? Let's talk. A little advice at the beginning could save you a lot of headaches later.

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