First Year Limited Company Guide: Everything You Need to Do After Incorporation

You've incorporated your limited company. Congratulations! Now comes the part nobody tells you about: the first 12 months have more compliance requirements than any other year. Miss one deadline and you're facing penalties before you've even made your first sale.

This guide walks you through everything you need to do in your first year as a UK limited company director, month by month.

Immediately After Incorporation (Week 1)

The moment Companies House confirms your incorporation, the clock starts ticking on several deadlines. Here's what to do in your first week:

1. Set up a business bank account

You must keep company finances separate from personal finances. This is a legal requirement, not a suggestion. Most banks take 1-4 weeks to open a business account, so start immediately.

Popular options for UK startups:

• Starling Business (free, quick to open)
• Tide (free, good app)
• Revolut Business (multi-currency)
• Traditional banks (slower but established)

2. Note your key dates

Write these down immediately:

• Incorporation date: This determines all your deadlines
• Accounting reference date (ARD): Usually the last day of the month of your incorporation anniversary
• First accounts due: 21 months from incorporation (first year only)
• Confirmation statement due: 12 months from incorporation, then file within 14 days

3. Register for Corporation Tax

You must register for Corporation Tax within 3 months of starting to trade. You can do this online at gov.uk. HMRC will then send you a Unique Taxpayer Reference (UTR) for the company.

4. Decide on VAT registration

If you expect turnover to exceed £90,000 in your first 12 months, register for VAT now. See our VAT threshold guide for details. You can also voluntarily register if:

• You'll reclaim more VAT than you charge (common for startups with high setup costs)
• Your clients are VAT-registered businesses (they can reclaim what you charge)

Month 1-3: Set Up Your Systems

1. Set up accounting from day one

Don't wait until year-end to start bookkeeping. Every transaction from day one must be recorded. Choose a system:

• Cloud accounting software (Xero, FreeAgent, AccountsOS)
• Spreadsheet (not recommended but legally acceptable)
• Hire a bookkeeper

2. Start a receipt habit

Every business expense needs a receipt. Create a system now:

• Snap photos of receipts immediately
• Forward email receipts to a dedicated folder
• Use an app that auto-extracts receipt data

HMRC can request receipts for any expense you claim. No receipt = no deduction.

3. Understand what expenses you can claim

As a limited company, you can claim expenses that are "wholly and exclusively" for business purposes. Common first-year expenses:

• Company formation costs
• Equipment (computers, phones)
• Software subscriptions
• Home office costs (if working from home)
• Professional services (accountant, legal)
• Marketing and website costs
• Travel to clients

See our full expenses guide for what you can and can't claim.

4. Set up payroll (if paying yourself a salary)

If you're paying yourself even a small salary, you must register as an employer with HMRC and operate PAYE. This applies even if you're the only employee.

The most tax-efficient approach for most directors is a salary of £12,570 (the personal allowance) plus dividends. See our salary calculator for the optimal split.

Month 4-6: Establish Your Routine

1. Monthly bookkeeping rhythm

Set a recurring calendar event to reconcile your accounts monthly:

• Match bank transactions to invoices/receipts
• Categorise any uncategorised transactions
• Review outstanding invoices
• Check upcoming bills

This takes 30 minutes monthly vs. 30 hours at year-end.

2. Quarterly VAT returns (if registered)

If you're VAT registered, your first VAT return is due one month and 7 days after your first VAT quarter ends. This must be filed using Making Tax Digital (MTD) compatible software. Use our VAT calculator to estimate what you'll owe.

3. Pay yourself consistently

Set up regular salary payments and dividend declarations. Keep board minutes recording dividend decisions. Many directors pay monthly salary and quarterly dividends.

4. Track mileage from the start

If you use your personal car for business, track every business journey with:

• Date
• Start and end points
• Miles driven
• Purpose of journey

You can claim 45p per mile for the first 10,000 miles, then 25p. Use our mileage calculator to track your claims. This adds up fast but requires contemporaneous records.

Month 7-9: First Accounts Preparation

1. Review your records

Around month 7, do a full review:

• Are all bank transactions categorised?
• Do you have receipts for all expenses?
• Are all invoices raised and recorded?
• Is your debtor/creditor list accurate?

2. Consider year-end tax planning

Before your accounting year-end:

• Can you make pension contributions? (tax-deductible for the company)
• Should you buy equipment before year-end? (capital allowances)
• Have you claimed all allowable expenses?
• Is your salary/dividend split optimal?

3. Prepare for Corporation Tax

Corporation Tax is due 9 months and 1 day after your year-end. For a March year-end, that's January 1st. Start setting aside funds for this. Use our corporation tax calculator to estimate your liability, and see our corporation tax deadline guide for all the key dates.

Current rates (2025/26):

• 19% on profits up to £50,000
• 25% on profits over £250,000
• Marginal relief between these amounts

Month 10-12: Year-End and First Filings

1. First Confirmation Statement

Your first Confirmation Statement is due within 14 days of your incorporation anniversary. This confirms:

• Registered office address is correct
• Director details are correct
• Shareholder details are correct
• SIC code (business activity) is correct

Filing fee: £34 online. Late filing penalty: £150+.

2. Prepare first accounts

For your first year, you have up to 21 months from incorporation to file accounts with Companies House. However, it's better to prepare them earlier because:

• Corporation Tax return needs them
• You'll want to know your tax liability
• Banks and lenders may request them

Most new companies qualify for micro-entity accounts (simplified format).

3. First Corporation Tax return (CT600)

Due 12 months after your accounting period ends. For your first accounts, this might cover up to 18 months if you chose an extended first period.

You can file CT600 yourself using HMRC's online service or accounting software, but many directors use an accountant for their first return.

First Year Deadline Checklist

Common First-Year Mistakes

1. Mixing personal and business finances

Opening a business account doesn't mean much if you pay personal expenses from it or move money between accounts without recording it. Every transfer must be documented.

2. Not recording director's loans

If you put personal money into the company or take money out (beyond salary/dividends), this creates a director's loan. Track every penny. An overdrawn director's loan account (where you owe the company) triggers Section 455 tax.

3. Missing the Corporation Tax payment deadline

Corporation Tax is due before you file the return. Many new directors assume they're the same date. You have 9 months and 1 day to pay but 12 months to file. Miss the payment date and you'll pay interest from day one.

4. Not keeping receipts

"I'll sort out the receipts later" is a recipe for disaster. HMRC can disallow expenses without supporting documentation, even if the expense was genuine and legitimate.

5. Forgetting to register for PAYE

Even if you only pay yourself a small salary, you must register as an employer before your first payment. Retrospective registration is possible but messy.

6. DIY accounting without understanding it

Using accounting software doesn't mean you understand accounting. If you don't know the difference between accrual and cash accounting, or why your profit doesn't match your bank balance, consider getting help early.

First Year Costs to Budget For

Plan for these costs in your first year:

How AccountsOS Helps First-Year Companies

Starting a limited company is overwhelming. Between learning about CT600s, VAT schemes, and PAYE, it's easy to miss something critical.

AccountsOS is built for this exact situation:

Deadline tracking: Every deadline specific to your company is tracked automatically. Get alerts weeks in advance, not the day before.

Auto-categorisation: Upload receipts and bank statements. AI categorises transactions correctly based on UK tax rules, not generic categories.

Plain English guidance: Ask "can I claim my home office?" and get a clear answer with the exact HMRC rules, not accounting jargon.

Built for UK Ltd companies: Not a generic accounting tool adapted for UK. Every feature assumes you're a UK limited company director.

£19/month: A fraction of an accountant's fee, with AI available 24/7 to answer your questions.

Your first year sets the foundation for your company's financial health. Get it right from the start.

Frequently Asked Questions

Do I need an accountant in my first year?

Not legally, but consider getting at least a one-off consultation to set up your systems correctly. See our guide on whether you need an accountant. Many accountants offer "setup packages" for new companies. Alternatively, use AI-powered accounting software that guides you through the process.

When does my company's tax year start?

Your company has its own accounting period, separate from the April-April tax year. It usually runs from your incorporation date to your Accounting Reference Date (ARD), typically the last day of your incorporation month.

How much should I pay myself in my first year?

The most tax-efficient approach is usually a salary of £12,570 (the personal allowance) plus dividends. However, if your company isn't yet profitable, you might take a lower salary or no salary initially. See our salary calculator.

What if my company makes a loss in year one?

Losses can be carried forward against future profits, reducing future Corporation Tax. You still need to file accounts and a CT600, just with no tax to pay. Trading losses can even be carried back against previous profits if you had any.

Can I change my company's year-end?

Yes, by filing form AA01 with Companies House. You can shorten your accounting period at any time, or extend it once every five years (maximum 18 months). This can be useful for tax planning.

Do I need to file accounts if my company hasn't traded?

Yes. Even dormant companies must file annual accounts and a Confirmation Statement. The accounts format is simpler (dormant company accounts) but they must still be filed to avoid penalties.