What do you actually need an accountant for? A guide for food, drink and ecommerce founders

The short answer: most founders need an accountant for five things. Keeping the books straight, staying on the right side of HMRC and Companies House, getting VAT right on every product, knowing their true margin, and making sure there is cash in the bank when bills fall due. For food, drink and ecommerce businesses, VAT and margin are where the costly mistakes usually happen.

Below are the ten questions that come up again and again, answered in plain English.

1. Do I need to register for VAT?

You must register if your VAT taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone. The 12 months is a rolling window, so it is not your financial year or the tax year. You check it at the end of every month.

For food and drink brands there is a second question that matters just as much: what rate applies to each product? Most food is zero rated, but there are well known exceptions. Ice cream, confectionery (apart from cakes and some biscuits), alcoholic drinks and most other drinks are standard rated. Where a product sits can come down to fine detail in HMRC's guidance, and getting it wrong across a whole range can mean paying VAT you did not charge your customers.

If you sell a mix of products online, your shop platform and your accounting software need to apply the right rate to each line. That is worth checking before you register, not after.

Official guidance: Register for VAT and Food products (VAT Notice 701/14).

Find out more about our VAT service.

2. Should I be a sole trader or a limited company?

There is no single right answer. It depends on how much profit you expect, how you want to pay yourself, whether you will take on investors or sell to larger customers, and how much admin you are happy with. A limited company keeps your business separate from you personally, but it comes with more filing duties, including annual accounts, a confirmation statement and a corporation tax return.

This is one of the best questions to take to an accountant early, because changing structure later is more work than choosing well at the start.

Find out more about our startups and company formation service.

3. What is Making Tax Digital and does it affect me?

Making Tax Digital for Income Tax changes how sole traders and landlords report to HMRC. Instead of one tax return a year, you keep digital records in compatible software and send a summary to HMRC every three months, then a final return after the year ends.

It is being phased in by income from self employment and property, before expenses:

• From 6 April 2026: qualifying income over £50,000 (based on your 2024 to 2025 tax return)

• From 6 April 2027: qualifying income over £30,000 (based on your 2025 to 2026 tax return)

• From 6 April 2028: qualifying income over £20,000

The quarterly deadlines are 7 August, 7 November, 7 February and 7 May. The next one is 7 November 2026. HMRC has said it will not give penalty points for late quarterly updates in the 2026 to 2027 tax year, but you still have to send them all before you can file your tax return.

If you trade through a limited company, this particular change does not apply to the company's profits.

Official guidance: Use Making Tax Digital for Income Tax and Send quarterly updates.

Find out more about our personal tax service for founders.

4. Do I need to verify my identity with Companies House?

Yes, if you are a company director or a person with significant control. Identity verification became a legal requirement on 18 November 2025. If you were already a director before then, you need to verify before your company files its next confirmation statement. The transition period for everyone already in post ends on 18 November 2026, which is only weeks away.

You can verify for free using GOV.UK One Login, or through an authorised agent such as an accountant or solicitor. Once verified you receive a personal code, which is needed for company filings. Keep it safe and only share it with people you trust.

Official guidance: Verifying your identity for Companies House.

5. I sell through online marketplaces. Does HMRC know?

Increasingly, yes. Since 1 January 2024, digital platforms that let people sell goods or services have had to collect seller details and report their income to HMRC each year. This does not change the tax rules themselves, but it does mean HMRC can compare what platforms report with what sellers declare.

If you sell across your own website and one or more marketplaces, the simplest protection is to reconcile each platform's payouts, fees and refunds back to your books every month.

Official guidance: Reporting rules for digital platforms.

6. Why am I busy but always short of cash?

This is one of the most common frustrations for product businesses, and it is rarely about sales. Cash gets tied up in stock, packaging and ingredients long before a customer pays. Larger customers may pay weeks after delivery, and marketplaces hold back payouts. Meanwhile suppliers, VAT and wages are due on fixed dates.

A simple rolling cash flow forecast shows you when the pinch points are coming, so you can plan a stock order, a promotion or a funding conversation before it becomes urgent.

Find out more about our cash flow and forecasting service.

7. What is my real margin on each product?

Many founders know their headline margin but not what is left once every cost is counted. For a physical product that includes the landed cost of ingredients or stock, packaging, fulfilment and postage, platform and payment fees, promotions and discounts, and any deductions a customer takes from your invoice.

Working this out product by product, and channel by channel, often shows that one route to market is quietly funding another. It is the single most useful number for pricing decisions.

Find out more about our margin, stock and pricing service.

8. What can I claim as a business expense?

The general rule is that a cost must be incurred wholly and exclusively for the business. In practice that covers things like stock, packaging, software, marketing and professional fees. The grey areas are where founders most often trip up, such as costs that are partly personal, samples and stock given away, and spending before the business started trading. Good records and a quick check with your accountant avoid both overclaiming and missing things you are entitled to.

9. I want to hire my first employee. What do I need to do?

You need to register as an employer with HMRC, run payroll and report pay to HMRC each time you pay someone, and meet your workplace pension duties. It is worth setting payroll up properly from the first person, because fixing errors later takes far longer than getting the process right at the start.

Find out more about our payroll service.

10. How much does an accountant cost?

It depends on what you need and how many transactions you have. At Kubed Solutions, bookkeeping starts from £100 plus VAT per month. Year end accounts start from £250 plus VAT for a dormant company and from £450 plus VAT for an active company. Everything else is quoted after a short conversation about your business, so you only pay for what you actually need.

Find out more about our bookkeeping and management accounts service and our year end accounts and corporation tax service.

When is the right time to get an accountant?

Earlier than most people think. The right moments are usually when you are choosing a business structure, when turnover is heading towards the VAT threshold, when you start selling on more than one channel, when you take on your first employee, or when you simply no longer know whether you are making money.

Why founders work with Kubed Solutions

Kubed Solutions is an ICAEW regulated practice and a Xero Advisor Certified firm that specialises in FMCG, food and drink, and ecommerce businesses. Our founder, Gouri Kubair, spent eight years in audit at Deloitte and is an ACA with the ICAEW. She also built Holy Lama Naturals, an award winning food and body care brand, so she has faced the same VAT, margin and cash flow questions as the founders she now advises.

Book a 30 minute call to talk through where your business is and what would help most.

This article is general information, not advice for your specific circumstances. Rules and thresholds change, so please check the linked GOV.UK guidance or speak to us before acting.