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The Small Business Accounting Guide
Plain-English explanations of UK tax, bookkeeping, and compliance — written by the team at Everett King.
Understanding UK Accounting & Tax for Small Businesses
Running a small business in the UK comes with real financial responsibilities — and the rules change regularly. Whether you are a sole trader just starting out, a limited company director navigating Corporation Tax, or a landlord preparing for Making Tax Digital, understanding the basics of accounting and tax planning can save you money and protect you from penalties.
This guide covers the core areas every UK business owner should understand: Self Assessment, Corporation Tax, VAT, bookkeeping, and the upcoming Making Tax Digital requirements. It is written by the qualified accountants at Everett King — an ACCA-accredited practice with offices in Bristol, Exeter, Rhydlewis and Bournemouth.
We believe that informed clients make better decisions. The more you understand about your obligations and the opportunities available to you, the more effectively we can work together to plan your finances and minimise unnecessary tax liabilities. Use this guide as a starting point — and contact our team when you are ready to discuss your specific circumstances.
Key Topics
What You Need to Know
Self Assessment & Income Tax
Every UK sole trader and director must file a Self Assessment return by 31 January. Late submission attracts an immediate £100 penalty, rising sharply with further delays. Keeping accurate records throughout the year — receipts, invoices, mileage logs — makes the process far simpler and ensures you claim every allowable expense.
Corporation Tax Planning
UK limited companies pay Corporation Tax on their profits. The main rate is 25% for profits above £250,000, with a small profits rate of 19% for profits under £50,000. Effective planning — using capital allowances, R&D credits, and pension contributions — can significantly reduce the liability your company owes.
Making Tax Digital (MTD)
HMRC's Making Tax Digital initiative requires businesses and landlords above the income threshold to maintain digital records and submit quarterly updates via compatible software. MTD for Income Tax launches in April 2026 for those earning over £50,000. Everett King helps clients select the right software — Xero, QuickBooks, Sage or FreeAgent — and migrate painlessly.
Bookkeeping Best Practices
Good bookkeeping is the foundation of every healthy business. Reconciling your bank accounts monthly, categorising transactions consistently, and keeping VAT records separate saves hours at year-end and prevents costly mistakes. Cloud accounting platforms make real-time visibility straightforward, whether you manage it in-house or outsource to our payroll bureau.
Common Questions
Frequently Asked Questions
When do I need to register for VAT?
You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period. Voluntary registration below this threshold can be beneficial if your clients are VAT-registered businesses.
What expenses can I claim as a sole trader?
Allowable expenses include office costs, travel (excluding personal commuting), marketing, professional subscriptions, and a proportion of home working costs. Capital items such as computers are treated differently through capital allowances.
How long do I need to keep business records?
HMRC requires most business records to be kept for at least 6 years from the end of the accounting period they relate to. Companies House rules differ slightly for statutory records.
What is the Annual Investment Allowance?
The Annual Investment Allowance (AIA) lets businesses deduct the full cost of qualifying plant and machinery (up to £1 million per year) against taxable profits in the year of purchase, providing immediate tax relief rather than spreading it over years.
Speak to an Expert
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Our qualified accountants are here to help you navigate UK tax and accounting with confidence. Book a free initial consultation today.
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