Starting a Business in Brighton: The Accountant’s Guide

Brighton and Hove is genuinely one of the best places in the UK to start a business. Strong local economy, a tech and creative sector that punches well above its weight, good transport links to London, and a business community that actually supports each other. If you are thinking about starting a business here, you have picked a good place to do it.

What follows is a plain English guide to the financial and tax decisions you need to make when you start — from choosing a structure to getting your record-keeping right from day one.

Step one: choose your business structure

This is the first decision and one of the most important. You have three main options.

Sole trader is the simplest. You register with HMRC as self-employed, keep records of your income and expenses, and file a self-assessment tax return each year. All profits are taxed as your personal income. Simple to set up, minimal administration, but no separation between you and the business.

Limited company is a separate legal entity. You are a director and shareholder. The company pays Corporation Tax on profits, and you take money out as salary and dividends — typically more tax-efficient once profits exceed around £30,000–£35,000. More administration, but better tax planning options and liability protection.

Partnership is where two or more people share ownership. Each partner pays tax on their share of the profits. A Limited Liability Partnership (LLP) provides some liability protection.

Most people starting out in Brighton go sole trader first and consider incorporation when their profits grow. That is a reasonable approach — but get advice specific to your situation before deciding.

Register properly with HMRC

If you are going self-employed, you must register with HMRC by 5 October following the end of your first tax year of trading. So if you start trading in May 2025, you must register by 5 October 2025. Missing this deadline results in penalties.

If you are incorporating, you register the company at Companies House — which can be done online in a matter of hours for around £50. You then register the company for Corporation Tax within three months of starting to trade.

Keep records from day one

This is the one piece of advice that saves people the most pain. Start keeping records immediately — every invoice you raise, every expense receipt, every bank transaction. Do not wait until the end of the year and try to reconstruct it all.

Cloud accounting software makes this straightforward. Xero and QuickBooks both connect directly to your bank account and categorise transactions automatically. The cost is modest and the time saving is significant. We set this up for all new clients as part of onboarding.

VAT: when do you need to register?

You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period. Once registered, you charge VAT on your sales and can reclaim VAT on your purchases.

Some businesses register voluntarily before hitting the threshold — particularly if their customers are VAT-registered businesses who can reclaim the VAT you charge. Others avoid it as long as possible because it adds administration and can make you look more expensive to consumers.

The right answer depends on your situation. We advise on this as part of every new client setup.

What expenses can you claim?

For most businesses, allowable expenses include: premises costs (rent, rates, utilities), equipment and technology, vehicle costs (business use only), travel (excluding ordinary commuting), professional subscriptions, accountancy fees, marketing and advertising, and staff costs. If you work from home, you can claim a proportion of your home running costs.

The test is whether the expense is incurred wholly and exclusively for business purposes. Keep receipts for everything and record them promptly.

Pay yourself properly

One of the most common mistakes new business owners make is treating the business bank account as a personal account. This creates bookkeeping chaos and makes it much harder to understand whether your business is actually profitable.

Open a separate business bank account immediately — even as a sole trader. Pay yourself a regular amount and treat it as a salary. Keep everything else in the business.

Plan for your tax bill

As a sole trader or self-employed person, you pay income tax and National Insurance through self-assessment. The payment dates are 31 January and 31 July each year. Many people are caught out by Payments on Account — HMRC asks for advance payments towards next year's tax bill, which can result in a significantly larger payment than expected.

Set aside approximately 25–30% of your profits from day one into a separate account and leave it there until your tax bill is due. You will never be caught short.

Get an accountant early

The biggest mistake most new business owners make is waiting until their first year end to find an accountant. By then, decisions have been made that cannot be undone — structure, record-keeping, VAT, whether to register as an employer. Good advice at the start costs far less than correcting problems later.

We offer free initial consultations to new and prospective business owners in Brighton and Hove. No obligation, no jargon. Just a straightforward conversation about your situation and what you need to do.