You registered the company. The certificate arrived. For about 48 hours, everything felt exciting.
Then the letters started. HMRC. Companies House. References to UTRs, Corporation Tax, confirmation statements. Deadlines you didn’t know existed. Jargon that assumes you’ve done this before.
Most new directors hit this wall in their first few weeks and the ones who handle it best are usually the ones who got proper guidance early. That’s precisely where ltd company accountants earn their value. Not just filing returns at year-end, but helping founders understand what they’re actually responsible for before something goes wrong.
This isn’t a dry compliance checklist. Think of it as a first-year survival guide of the things you genuinely need to know to avoid penalties, cash flow surprises, and the specific mistakes that trip up new directors repeatedly.
HMRC vs Companies House: The Confusion Nobody Warns You About
Most new directors assume these two bodies are connected. They’re not and mixing them up causes real problems.
| HMRC | Companies House | |
| What they control | Tax collection and compliance | Company registration and legal records |
| What you file with them | Corporation Tax, VAT, PAYE, Self Assessment | Annual accounts, confirmation statement |
| Key deadlines | Corporation Tax due 9 months after year-end | Accounts due 9 months after year-end |
| Do they communicate? | Yes,limited data sharing | Yes,limited data sharing |
| Penalty for missing deadlines | Financial penalties + interest | Financial penalties + potential strike-off |
Registering with Companies House does not automatically register you with HMRC for Corporation Tax. You need to do that separately within three months of starting to trade. Missing that window is one of the most common and easily avoided mistakes new directors make.
Your First 90 Days: What to Actually Do?
The incorporation certificate arrives and suddenly you’re running a company. Here’s how to structure the first three months without losing your mind.
Weeks 1–2
- Open a dedicated business bank account immediately mixing personal and company money creates serious problems later
- Expect your UTR (Unique Taxpayer Reference) from HMRC within 2–4 weeks of incorporation
- Set up a basic folder system for receipts, invoices, and expenses from day one
Month 1
- Register for Corporation Tax with HMRC don’t wait
- Choose and set up an accounting software (Xero, QuickBooks, or FreeAgent work well for most small companies)
- Check whether your projected turnover will exceed the VAT threshold of £90,000
Months 2–3
- Decide on your salary and dividend structure before you start taking money out
- Set up PAYE if you’re paying yourself a salary even as the sole director
- Start tracking every business expense from the beginning, not retrospectively
The founders who skip these steps don’t usually notice the consequences until month eight or nine when deadlines are approaching and the records simply aren’t there.
What You’re Actually Responsible For?(HMRC Obligations)
This is the core of what running a limited company means in practice. Four main areas apply to almost every new company.
Corporation Tax
Every limited company pays Corporation Tax on its profits currently 19% for profits under £50,000, rising to 25% above £250,000. You must register with HMRC within three months of trading, file a Company Tax Return within 12 months of your accounting year-end, and pay any tax owed within nine months and one day of year-end.
Critically even if you made no profit, you still need to file a nil return. HMRC doesn’t know you made no profit unless you tell them.
VAT
Registration becomes mandatory once taxable turnover crosses £90,000 in any rolling 12-month period. Below that, it’s optional. Voluntary registration makes sense if your clients are VAT-registered businesses and you have significant input VAT to reclaim. It’s less sensible if you serve mostly consumers, since you’re effectively adding 20% to your prices overnight.
Common mistake: Directors who hit the threshold mid-year and don’t realise it. VAT registration backdates to when you crossed the threshold meaning you owe HMRC VAT on sales you already made, whether you collected it from clients or not.
PAYE
The moment you pay yourself or any employee a salary above the Lower Earnings Limit (currently £6,396 per year), you need PAYE registered. Even as a sole director paying yourself £9,100, PAYE applies. This surprises a lot of people but it’s non-negotiable.
Self Assessment
Directors must file a personal Self Assessment tax return each year, separate from the company’s Corporation Tax return. If you take dividends, have other income sources, or earn above £100,000, Self Assessment is mandatory. Miss the 31 January deadline and the penalties start immediately.
The Obligations Most Directors Underestimate(Companies House)
Companies House runs quietly in the background until it doesn’t.
Annual Accounts must be filed within nine months of your company’s accounting reference date. For a new company, the first accounting period can be up to 18 months, which confuses a lot of directors about when their first accounts are actually due.
Confirmation Statement is filed once a year and confirms that the company’s registered details are accurate. It is not the same as annual accounts; many new directors confuse the two and think filing one covers the other. It doesn’t.
Dormant companies if you registered a company but haven’t traded still have filing obligations. The company doesn’t disappear from Companies House’s radar just because it’s inactive.
Mixing Personal and Company Money: The Mistake That Keeps Coming Back
“It’s my company can’t I just use the money?”
Technically you can take money out. How you take it determines what tax you pay and what risk you carry.
| Method | Tax Treatment | When to Use |
| Salary | Income Tax + National Insurance | Regular, pensionable income |
| Dividends | Dividend Tax (lower rate) | When company has distributable profit |
| Director’s Loan | S455 tax if not repaid within 9 months | Short-term only, with caution |
Directors who transfer money informally and “sort it out later” create two problems: messy accounts that cost more to untangle, and unexpected tax bills when HMRC reclassifies informal withdrawals as salary. Neither is pleasant.
Why Profitable Companies Still End Up With HMRC Problems?
This catches directors completely off guard. Revenue is growing. Clients are paying. And yet there’s a tax bill they can’t cover.
The explanation is usually one of these:
- VAT timing VAT is collected from clients but belongs to HMRC. Spending it before the quarterly return is due is extremely common and extremely costly
- Corporation Tax timing the bill arrives nine months after year-end, by which point many directors have already spent the profit
- Poor bookkeeping expenses aren’t categorised correctly, meaning taxable profit is overstated and the tax bill is higher than it should be
- No cash reserves growth spending outpaces financial planning, leaving nothing when obligations arrive
The pattern is consistent: profitable business, no financial system, avoidable crisis.
The Real Cost of Getting Compliance Wrong
| Mistake | Potential Consequence |
| Late Corporation Tax filing | £100 immediate penalty, escalating with time |
| Late VAT return | Surcharge starting at 2% of VAT owed |
| Missing Self Assessment deadline | £100 fixed penalty, plus daily charges after 3 months |
| Failure to register for PAYE | Backdated NI liability plus penalties |
| Companies House late accounts | £150–£1,500 depending on delay |
| Continued non-compliance | Company strike-off by Companies House |
These figures compound. A director who misses two or three obligations in year one can face penalties across multiple fronts simultaneously and HMRC doesn’t particularly care that you didn’t know.
Do You Actually Need an Accountant?
Honest answer: it depends on your situation.
You may manage without one if:
- Your company has simple finances and no employees
- You’re comfortable with accounting software
- Revenue is well below the VAT threshold
- You have time to stay on top of deadlines yourself
You almost certainly need professional support if:
- You’re VAT registered or approaching the threshold
- You have employees or run payroll
- You’re taking salary and dividends and want to optimise the split
- Revenue is growing quickly and financial decisions are becoming more complex
- You’ve received any letters from HMRC you don’t fully understand
Good ltd company accountants do far more than file returns. They structure remuneration efficiently, flag compliance issues before they become penalties, and give founders clarity on decisions that have real financial consequences: salary vs dividends, VAT registration timing, pension contributions, expense categorisation.
The cost of an accountant is almost always lower than the cost of fixing avoidable mistakes.
Accounting Software vs Professional Support
Software is useful. It is not a substitute for professional judgement.
| Accounting Software | Professional Accountant | |
| What it does well | Recording, invoicing, bank reconciliation | Strategy, compliance, tax planning |
| What it misses | Deadlines, structural decisions, HMRC nuance | Nothing that’s the point |
| Risk level | Medium garbage in, garbage out | Low when managed properly |
| Best used for | Day-to-day bookkeeping | Annual strategy and compliance |
The ideal setup is both software for daily record-keeping, professional support for everything that requires judgement.
First-Year Financial Decisions That Matter More Than You Think
Small decisions in year one create consequences that last for years.
Getting your salary and dividend split wrong in month one means overpaying tax for the entire year. Registering for VAT before you need to add administrative burden and pricing pressure. Categorising personal expenses as business expenses invites HMRC scrutiny. Failing to set aside Corporation Tax from the beginning means a painful bill nine months later.
None of these are complicated to get right. They just require someone who knows what they’re doing to set them up correctly from the start.
First-Year Compliance Checklist
Use this as your ongoing reference:
Setup
- Business bank account opened
- Accounting software chosen and connected
- Registered for Corporation Tax within 3 months of trading
- VAT position assessed against £90,000 threshold
- PAYE registered if paying salary
- Self Assessment registered as director
Ongoing Filing
- Corporation Tax return filed within 12 months of year-end
- Corporation Tax paid within 9 months and 1 day of year-end
- VAT returns submitted quarterly (if registered)
- Confirmation statement filed annually with Companies House
- Annual accounts filed within 9 months of year-end
- Self Assessment filed by 31 January each year
Financial Management
- Bookkeeping updated monthly not quarterly
- All expenses categorised correctly from the start
- Salary and dividend strategy agreed before withdrawals begin
- Corporation Tax reserve set aside monthly from profit
- VAT collected kept separate from operating cash
Frequently Asked Questions
Do I need to register for Corporation Tax immediately after incorporating?
Not immediately, but close. HMRC requires you to register for Corporation Tax within three months of starting to trade not three months from incorporation. If you incorporated in January but didn’t take on a client until March, the clock starts in March. That said, don’t wait until the deadline approaches. Registration is straightforward and getting it done early removes one item from an already busy list. Missing the three-month window doesn’t just trigger a penalty.it signals to HMRC that your compliance habits need watching from the start.
What happens if I miss a filing deadline with HMRC or Companies House?
Penalties start immediately and escalate the longer you leave it. A late Corporation Tax return triggers a £100 penalty on day one, with further charges applied at three months, six months, and beyond. Late VAT returns attract surcharges calculated as a percentage of the VAT owed. Missing the Self Assessment deadline on 31 January costs £100 automatically, with daily penalties added after three months. Companies House late accounts carry fines between £150 and £1,500 depending on how overdue they are. The consistent pattern is that ignoring deadlines always costs more than meeting them.
Can I run a limited company without hiring an accountant?
Yes, but it depends on your situation. A single-director company with simple finances, no employees, and revenue well below the VAT threshold can manage with good accounting software and careful attention to deadlines. The moment VAT registration applies, payroll gets involved, or revenue starts growing, the decisions become more complex and the cost of getting them wrong consistently exceeds the cost of professional support. Most directors who try to manage alone wish they’d brought someone in earlier.
Do dormant companies still have filing obligations?
Yes, and this surprises a lot of people. A company that has never traded or has stopped trading doesn’t disappear from HMRC and Companies House’s radar. You still need to file a confirmation statement with Companies House annually, submit dormant accounts, and notify HMRC that the company is dormant so they don’t expect a Corporation Tax return. Ignoring these obligations because the company isn’t active is one of the most common mistakes new directors make and Companies House can strike off a company for persistent non-compliance, even a dormant one.
How do directors legally pay themselves from a limited company?
Three ways: salary, dividends, or director’s loans. Salary goes through PAYE and attracts Income Tax and National Insurance but counts toward your State Pension record. Dividends come from company profit after Corporation Tax and carry lower personal tax rates with no National Insurance liability. Director’s loans allow short-term withdrawals but must be repaid within nine months of year-end or trigger a 33.75% Corporation Tax charge on the outstanding balance. Most directors use a combination of modest salary and dividends but the right split depends on profit level and personal circumstances.
Conclusion
Most HMRC problems in year one don’t happen because directors are careless. They happen because nobody explained the rules clearly at the beginning.
That’s where Lanop Business & Tax Advisors comes in. Lanop works with new limited company directors from day one setting up the right remuneration structure, registering for the correct taxes, keeping records clean, and making sure no deadline catches you off guard.
Year one sets the foundation. Get the structure right early and everything that follows becomes considerably more manageable. Get it wrong and you spend years fixing mistakes that were entirely preventable from the start.
