A “solopreneur” has to wear many hats. Successfully juggling all the accounting, tax, banking, and cash flow elements is critical. This guide covers key financial tools and tips for effectively managing the money side of a one-person UK business. 


Choosing the Right Business Structure 

Your business structure impacts everything from legal liability to taxes, so picking the right one is key: 

Sole Trader 

  • The simplest structure, with little registration needed.  
  • You and your business are one entity.  
  • You personally bear all business liabilities. 
  • Business profits are taxed as your personal income.  
  • You pay both income tax and National Insurance contributions. 
  • Bookkeeping is easier with personal and business finances together. 


Limited Company 

  • A separate legal entity, protecting your assets. 
  • Company director and shareholder are registered. 
  • Include your partner to save tax.  
  • Corporation tax is applied annually to company profits.  
  • Dividends are then distributed to directors but are taxable too.  
  • There is more administrative paperwork but more options for extracting capital. 

Think about your current and future needs regarding liability, administration, and tax efficiency when selecting your structure. You can also move between structures if you business grows.  


Setting Up Business Banking and Accounts 

Having dedicated business banking helps track finances separately from personal. Look for banks offering: 

Business bank accounts: Current accounts tailored to businesses, even one-person companies. 

Savings accounts: High interest accounts to hold operating reserves or grow surplus profits. 

Credit cards and cards: Business credit cards earn rewards and keep expenses separate. Debit cards access cash. 

Accounting integration: Ability to connect bank accounts with accounting software. 

Invoicing capabilities: Tools to create, send and collect invoices all in one place. 

Loans, overdrafts, and financing: Access capital when needed. 

Choose a provider that has a scalable service and offers decent software.  


Bookkeeping and Accounting Setup 

Do not leave maintaining your finances to a shoebox full of receipts. Using bookkeeping software from the start helps immensely: 

Accounting systems: Online software like Xero, QuickBooks, Sage. Can integrate with bank. 

Invoicing: Create, send, and track invoices and client payments. 

Expenses: Upload receipts and track tax-deductible costs. 

Payroll: Pay yourself, account for taxes. Some systems integrate payroll features. 

Reporting: Regularly review income, profit and loss, balance sheet. 

Taxes: Integrates with tools to handle VAT, tax prep and filing. 

Finding an accounting solution that provides all-in-one financial oversight suitable for your business model is ideal for solopreneurs. 


Managing Payroll as a One Person Company 

Paying yourself does not necessarily require payroll software. You have a few options: 

  • Pay yourself a minimum salary to meet HMRC requirements, taking the remainder as dividends. 
  • Using the free payroll tools provided by HMRC.
  • Doing manual payroll calculations yourself.
  • Using accounting system’s integrated payroll feature.
  • Outsourcing periodically to a bookkeeper or accountant 


Automating Financial Tasks 

Automating routine financial jobs saves considerable time as a solo business owner: 

Customer invoices:  Auto-generate recurring invoices for retainers, subscriptions, etc. 

Tax payments: Pay VAT, corporation tax and filing obligations on time through direct debit. 

Bill payments: Utility bills, software subscriptions and other fixed costs can be auto paid. 

Payroll: Schedule automatic regular salary payments to yourself. 

Client payment reminders: Auto-email due invoice reminders and overdue notices. 

Financial reporting: Download key reports on a schedule. Review periodically rather than manually each time. 

Identify manual financial tasks that can be automated both to save time and exercise tighter control with regular scheduling. 


Managing Cash Flow 

Carefully monitoring cash flow is imperative with limited reserves as a solopreneur: 

Maintain a cash flow forecast: Track all anticipated income and payments month-to-month to foresee low points. 

Invoice promptly and collect quickly: Get paid faster to keep cash flowing in. Offer payment plans for large invoices if needed. 

Pay expenses only when due: Do not pay early unnecessarily. Take advantage of due periods. 

Have a collections process: Follow up with late payers to avoid write-offs. 

Only take what you need: Limit drawings to required personal salary, leaving rest in business. 

Ongoing focus on cash flow helps you spot potential trouble early and make adjustments to keep operations running smoothly. 


Key Takeaways 

The lack of financial partners when running a solo business places extra responsibility on your shoulders. By implementing structures and tools tailored to your needs from the start, you can effectively control the numbers, taxes, payments, and cash flow critical to success.  

Make use of available technology and do not hesitate to bring in outside accounting expertise so you can focus on growth. With the right financial foundation, a one-person business can flourish. 

To discuss your personal finances in more detail and ensure you remain tax efficient throughout running your business, speak to our multi award winning Chartered Financial Advisers at Fiducia.