Category: Business

https://www.gov.uk/guidance/closure-of-the-service-to-file-your-company-accounts-and-tax-return

Who has to file company accounts?

All UK limited companies must file company accounts, regardless of size, profit level, or trading activity. This includes companies that:

made no profit
traded for only part of the year
did not trade at all

Dormant companies must still file dormant accounts. Responsibility always rests with the company director, even if software or an agent is used.

This article focuses on limited companies. Sole traders are not required to file company accounts with Companies House, as they are not incorporated.

When do company accounts need to be filed?

If you are filing your first set of accounts, the deadline is usually up to 21 months from the date of incorporation. After that, company accounts must normally be filed within nine months of the end of the accounting period.

Missing the deadline leads to automatic penalties and can create ongoing compliance issues. These penalties are avoidable, but only if deadlines are understood and planned for early.

How much does it cost to file company accounts online?

At present, filing company accounts with Companies House online is free. There is no submission fee charged by Companies House.

However, this does not necessarily mean filing will remain cost-free forever. From April 2026, most companies will need to use commercial software to file their Company Tax Return with HMRC, and many businesses are choosing software that also handles Companies House accounts in one place.

The cost, therefore, is shifting away from filing fees and towards software subscriptions or support, even for directors who remain hands-on.

Filing accounts online: What’s changing from April 2026?

The HMRC online filing service for Company Tax Returns and accounts will close on 31^st March 2026. Up to and including that date, you can continue to use it to file and amend:

your Company Tax Return (CT600) with HMRC
your company accounts submitted alongside that return

From 1^st April 2026, you will no longer be able to file Company Tax Returns or associated accounts using HMRC’s free online service. Instead, you will need to use commercial software, file by paper, or appoint an agent.

This change is being made because the existing service no longer meets modern digital standards or reflects updates to UK company law. The commercial software market has matured and now offers stronger validation, reminders, and built-in support than the legacy system.

If you run a small, limited company, filing company accounts is really about following a sensible sequence. There’s no trick to it — but there is an order that makes life easier.

Whether you’re using the current Companies House service or commercial software, the steps below are broadly the same.

How to File Company Accounts

Step 1: Get Your Numbers Straight First

Before you log into anything, make sure your figures are finished. This means all your income and costs for the year are in, your bank balance matches your records, and nothing is sitting in a “I’ll sort that later” pile.

This part matters because once accounts are filed, changing them is awkward and very public. Filing rough numbers and hoping to tidy things up later usually causes more stress than it saves.

At this point, you should know when your accounting year starts and ends, what your balance sheet looks like, and whether your company counts as a micro-entity. For most one-person and very small, limited companies, it usually does.

Step 2: Put the accounts into the right shape

Company accounts don’t need to be fancy, but they do need to follow a set format. For micro-entities, that’s mainly a balance sheet, a few notes, and a declaration from you as director saying the accounts are correct.

You can do this using accounting software or a simple accounts template that’s designed for Companies House filing. From April 2026 onwards, most people will be using commercial software anyway, especially if they’re also filing their corporation tax at the same time.

Before you submit anything, the accounts need your formal approval as director. That sounds grand, but in practice it’s just you confirming that the numbers are right.

Step 3: Choose how you’re going to file

You’ve got a couple of options when it comes to filing:

Some directors file directly with Companies House. Others use software that files accounts and tax returns together. Neither approach is “better” — it’s about what suits how you like to work.

From April 2026, you’ll need software to file your Company Tax Return with HMRC anyway, so many independent business owners choose one system that handles everything in one place.

Step 4: Submit the accounts to Companies House

Once you’re logged in, you’ll be guided through the submission. This is where being calm and un-rushed helps.

Check that your company name and director name match what’s on record, make sure the accounting period is right, and double-check the figures before hitting submit. The system will run basic checks, but it won’t catch everything — the responsibility still sits with you.

When the submission goes through, you’ll get confirmation. Save it. You’ll thank yourself later.

Your accounts are filed with Companies House — that’s one box ticked.

Step 5: Don’t forget the tax side

Filing company accounts does not cover your corporation tax. That’s a separate job with a separate deadline.

Up to 31^st March 2026, you can still use HMRC’s online service to file your Company Tax Return. After that, you’ll need software, an agent, or a paper return. The numbers should match your accounts, but the submission itself is different.

This is one of the most common DIY slip-ups, so it’s worth keeping firmly in mind.

Step 6: Keep Copies and Move On

Once everything’s filed, keep copies of your accounts, confirmations, and tax submissions somewhere safe. If HMRC ever asks a question, or if you decide to get help later, having those to hand makes life much easier.

Then move on. This is admin, not a judgement on your business. Done properly, it’s just another annual task you can tick off and forget about until next year.

Common mistakes when filing yourself

Most directors who run into problems aren’t careless; they simply aren’t aware of how precise the process needs to be.

A common mistake is filing accounts that are still drafts or that don’t match the corporation tax figures submitted to HMRC. Another frequent issue is selecting the wrong accounting period or company size, which can cause confusion later.

Some directors assume that accounting software automatically submits accounts when, in reality, it only prepares them. Submission is often a separate step that still requires your approval.

Finally, forgetting that accounts must be formally approved by a director before submission is another easy oversight, particularly for one-person companies.

Doing it yourself is perfectly reasonable, but it does require attention to detail.

Is doing it yourself the right choice?

For many micro-businesses with simple income and expenses, filing company accounts online is very manageable. One director, straightforward finances, and no unusual transactions generally make the process smooth.

However, if your company has dividends, director’s loans, losses, or changes in structure, it may be worth getting professional input, even if only as a one-off review. This doesn’t mean giving up control, it simply reduces risk.

Many directors choose a hybrid approach: preparing accounts themselves and having them checked before submission.

Summary

Filing company accounts online in the UK is far more accessible than it used to be. With the right preparation and understanding, many limited company directors successfully handle this themselves year after year.

The key is knowing what’s required, meeting deadlines, and recognising when something is outside your comfort zone. Independence is powerful and informed independence is even better.

Protect your business with Limited Company Insurance

Protectivity offers affordable limited company insurance suitable for self-employed, sole traders, limited companies and entrepreneurs, specialising in a wide range of different activities.

Public liability is included with options to add extras such as equipment cover, employers’ liability and other specific industry add-ons.

Explore the full list of business insurance we provide today – or get in touch with our team to discuss your specific requirements.

Sources

https://www.gov.uk/file-your-company-accounts-and-tax-return

*Disclaimer – This blog has been created as general information and should not be taken as advice. Make sure you have the correct level of insurance for your requirements and always review policy documentation. Information is factually accurate at the time of publishing but may have become out of date.

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09:18:17 GMT • 17 February 2026

Incident insights in pet care: What 2025 claims data tells us

12 February 2026

•

7 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

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Caring for pets professionally is deeply rewarding, but it also comes with a unique mix of responsibility, unpredictability, and risk. Whether walking dogs, grooming, boarding, or providing daycare, pet care professionals work in environments where small moments can quickly turn into incidents.

By looking closely at our pet care claims data from 2025, clear and valuable patterns begin to emerge. These insights help us understand not only what incidents occur most often, but which ones tend to result in higher costs — and where practical changes can make the biggest difference.

This article shares those insights in a clear, supportive way, with the aim of helping pet care professionals reduce risk, protect themselves, and continue delivering great care.

A snapshot of claim severity in 2025

While many claims sit at a relatively modest level, a smaller number of more serious incidents, often involving surgery, long recovery times, or loss of earnings, see claims payouts in the thousands, highlighting a the significant cost of claims that can have a major financial impact when they occur.

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The most common types of incidents

When incidents are grouped by type, five categories account for the vast majority of claims:

Incident Type	Approx. Share
Dog injury during walk or play	40%
Grooming-related injury	30%
Dog-on-dog aggression	15%
Policyholder injury or personal accident	10%
Illness, ingestion, heat or environmental factors	5%

Together, these categories reflect the everyday realities of professional pet care — walking, handling, grooming, and managing dogs in shared spaces.

Which incidents tend to cost the most?

While frequency matters, severity tells a deeper story. Some incident types occur less often but tend to result in significantly higher claims when they do happen.

Boarding, daycare, and transit incidents

Incidents occurring during boarding, daycare, or transit are among the most expensive on average. These situations often involve prolonged care or higher-risk environments, such as vehicles or shared indoor spaces. When something goes wrong in these settings, injuries can be more serious and treatment more complex, which naturally increases costs.

Transit-related incidents in particular highlight the importance of secure handling during loading, unloading, and travel. Even brief lapses in control can escalate quickly once a vehicle or road is involved.

Walk and play injuries

Injuries that occur during walks or free play are by far the most common and remain a major cost driver overall. These incidents typically involve falls, collisions, uneven terrain, or contact with environmental hazards such as sticks, glass, or dense undergrowth.

Although many walk-related injuries fall into a mid-range cost bracket, their sheer volume means they contribute significantly to total claims. Off-lead activity and challenging terrain tend to increase both frequency and severity, particularly for older dogs or certain breeds.

Heat and environmental risks

Incidents linked to heat, wildlife, or environmental exposure occur less frequently but often result in higher veterinary intervention. Heat-related illness, insect stings, and snake bites can deteriorate rapidly and require urgent treatment. These risks are highly seasonal, but their impact can be severe if not carefully managed.

Human injury and loss of earnings

Claims involving injury to the pet care professional themselves represent a meaningful portion of overall costs. Slips, trips, falls, being pulled over by dogs, or sustaining bites can lead not only to medical expenses but also time away from work. While many of these claims are moderate, those involving fractures or longer recovery periods can become particularly costly.

This category is an important reminder that risk management isn’t only about protecting pets — it’s also about safeguarding the people who care for them.

Grooming-related injuries

Grooming incidents are very common but usually less severe in financial terms. They often involve small cuts, nicks, or irritation that still require veterinary attention but typically resolve without prolonged treatment.

The frequency of grooming claims reflects how precise and delicate this work is. Dogs moving unexpectedly, sensitive areas such as ears and paws, and the use of sharp tools all increase the likelihood of minor injuries, even in experienced hands.

Seasonal trends: When claims increase

Claims tend to rise steadily through spring and peak in late summer.

The chart below shows an indexed view of seasonal claims risk across the year. Rather than reflecting claim volumes, it illustrates the relative level of risk, highlighting how incident likelihood builds gradually from spring, peaks in late summer, and then falls back toward winter.

Warmer weather, longer days, increased walking, and holiday routines all contribute to this seasonal uplift. Awareness of these patterns allows businesses to plan ahead and adjust practices during higher-risk periods.

What this means for Pet Care Professionals in 2025

The data points clearly toward a few practical, preventative themes.

Strong lead, harness, and transit procedures are essential, particularly when dogs are being moved in and out of vehicles. Simple checks and consistent routines can dramatically reduce the risk of high-cost incidents.

Heat and environmental awareness should be treated as a core safety issue, not an exception. Adjusting walk times, monitoring weather conditions, and being mindful of seasonal hazards can prevent serious outcomes.

Thoughtful route and activity selection matters. Off-lead play and challenging terrain should be balanced against the dog’s age, breed, and physical condition, with safer options used where appropriate.

In grooming environments, clear procedures, calm handling, and transparent communication with owners help manage expectations and reduce the likelihood of injury. Good documentation and aftercare guidance also play a valuable role.

Finally, protecting the wellbeing of pet care professionals themselves is critical. Managing group sizes, matching dogs carefully, and recognising early signs of risk can help reduce injuries and time away from work.

Closing thoughts

The 2025 claims data shows that most pet care incidents arise from everyday activities rather than unusual circumstances. Walks, grooming sessions, and routine handling account for the majority of claims — but the costliest incidents tend to occur when everyday moments escalate unexpectedly.

By understanding where incidents are most likely to happen, and which ones carry the greatest financial impact, pet care professionals can make informed, practical changes that improve safety for both pets and people.

Small adjustments, applied consistently, can make a meaningful difference — not just to claims outcomes, but to confidence, professionalism, and peace of mind across the industry.

Protect your pet clients with Pet Business Insurance

Whilst the risks are still relatively low for significant incidents that lead to higher financial losses, we’ve highlighted that however prepared or organised you are – unexpected things do happen.

Protectivity offer a comprehensive pet business insurance that can cover a wide range of pet care activities; dog walking, pet sitting, dog grooming, pet boarding and more.

The policy offers public liability with between £1 million and £10 million of cover and key cover up to £10,000 for new keys and locks, if you enter a client’s property to walk their dogs.

Also included is equipment cover, non-negligent cover, and a close family extension and our care, custody and control cover provides up to £100,000 worth of cover for animals in your care. For additional extras choose Employers’ Liability and commercial legal expenses.

Discover more and get your pet business quote online today!

Sources: Protectivity Claims data 1st Jan – 31st Dec 2025

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10:47:45 GMT • 11 February 2026

Pros and cons of being VAT registered

By Mandy Czyz

11 February 2026

•

5 mins read

Contributors

Mandy Czyz

Mandy has been with Starpeak Insurance Solutions since 2018, starting in sales in the consumer department and mov...

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For many small business owners, VAT registration feels like a milestone. It often signals growth – but it can also introduce new admin, new responsibilities, and new pricing considerations.

According to HM Revenue & Customs, the VAT registration threshold is £90,000 in taxable turnover for the 2024/25 tax year. While businesses must register once they exceed this, many choose to register voluntarily long before they reach it.

That’s because VAT registration isn’t simply a tax obligation. For the right type of business, it can reduce costs, improve credibility, and can make regular expenses – including equipment, fuel, software and other business expenses – more affordable over time.

Understanding when VAT works in your favour, and when it doesn’t, is key.

What does it mean to be VAT registered?

Being VAT registered means, you charge VAT on the goods or services you sell and submit regular VAT returns to HMRC. You then pay HMRC the difference between the VAT you’ve collected from customers and the VAT you’ve paid on business purchases.

The part many small businesses overlook is the benefit this brings you can reclaim VAT on eligible expenses. If your business has ongoing costs, this can quickly add up to meaningful savings across a year.

Do you have to register for VAT?

You must register for VAT if:

Your taxable turnover exceeds £90,000 in any rolling 12-month period

You expect to exceed this threshold in the next 30 days

However, registration is optional below this level. This is where many small businesses make a strategic decision to register early because of the financial advantages it can bring.

Why do businesses choose to register voluntarily?

Voluntary VAT registration is particularly common for businesses that sell to other VAT-registered companies. In these cases, adding VAT to invoices doesn’t make you more expensive, because your customers simply reclaim it.

At the same time, you gain the ability to reclaim VAT on your own costs, which often include:

Tools, equipment and stock

Vehicles, fuel and travel

Software and subscriptions

Professional services

You can read more about how this works in our guide to registering for VAT.

The advantages of being VAT registered

One of the main advantages is the ability to reclaim VAT on purchases. For tradespeople, contractors, consultants and product-based businesses, this reduces the real cost of running the business.

VAT registration can also influence perception. Many clients and suppliers associate VAT registration with an established, professional operation. In competitive industries, this credibility can support buying decisions.

For B2B businesses, VAT is often neutral to the customer but beneficial to you. There are also schemes, such as the Flat Rate Scheme, designed to simplify VAT reporting and reduce administrative effort.

The disadvantages of being VAT registered

The most significant drawback is increased administration. VAT returns must be submitted regularly, digital records must be kept under Making Tax Digital rules, and every transaction needs to be recorded accurately.

Pricing can also become more complicated for businesses that sell directly to consumers. Adding 20% VAT to prices may make you appear more expensive unless you absorb the cost into your margins.

Other challenges include:

Managing cash flow so VAT money is set aside

Understanding what you can and cannot reclaim

The risk of penalties for mistakes or late submissions

When VAT registration makes sense

VAT registration is often beneficial when:

Most of your customers are other businesses

Your business has regular, high expenses

You plan to grow beyond the threshold soon

Professional credibility is important in your industry

When it may be better to wait

Delaying registration can make sense if:

You sell primarily to the general public

Your expenses are relatively low

Your pricing is highly competitive

You want to keep admin minimal while starting out

The bottom line

Being VAT registered is not automatically good or bad – it’s a tool.

For the right business, it can improve cash flow, reduce real operating costs, and strengthen how you’re perceived. For others, it can add unnecessary complexity and make pricing harder.

The key is understanding how VAT fits your business model. And if you’re already paying for equipment, vehicles, software and other expenses subject to VAT, voluntary VAT registration may be more beneficial than you think.

Once VAT registered, protecting your business becomes even more important

Becoming VAT registered is often a sign that your business is growing. With that growth comes more responsibility, higher turnover, and greater financial exposure if something goes wrong.

At this stage, many business owners focus heavily on tax compliance and record-keeping but overlook another important form of protection: business insurance.

As your business takes on more work, purchases more equipment, and works with more clients, the potential risks also increase. A claim for accidental damage, lost tools, professional mistakes, or an injury involving a third party could interrupt your ability to trade and impact the income you’ve worked hard to build.

Whether you’re a sole trader, freelancer, contractor, or running a limited company, having the right insurance in place can provide valuable support alongside your VAT and tax obligations. It helps protect your income, your reputation, and your ability to continue operating if something unexpected happens.

Protectivity offers a range of business insurance policies designed specifically for small businesses and self-employed professionals at every stage of growth.

Explore the range of business insurance policies available from Protectivity to help safeguard your business as it grows beyond the VAT threshold.

Take a look and get a quote today!

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Mandy Czyz

10:09:33 GMT • 11 February 2026

Business website requirements: is having a website important?

5 February 2026

•

10 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

Most customers start their search for a product or service online. That’s why, for many small businesses, a website is a clear winner when it comes to valuable tools in the business.

In fact, according to a UK survey by Forbes Advisor, 78% of small business owners operate with a website, and over 83.5% of them say it plays a big part in their business. From acting as a digital shopfront to supporting sales enquiries, bookings, and advertising, there’s no doubt a website can play an important role.

That said, if your business already gets work through word of mouth, social media, or local recommendations, it’s completely reasonable to question whether you really need one. Websites can feel expensive, technical, and time-consuming, especially when your focus is on running the business, not managing technology.

The reality is that a modern website is no longer just a marketing extra. It’s a practical business tool that supports sales, marketing, credibility, and long-term growth — often working quietly in the background while you focus on day-to-day operations.

In this article, we’ll explain why having a website matters, how it supports different areas of your business, and what a small business website actually needs, without unnecessary features or jargon.

Quick reasons a small business needs a website

At its core, a website helps with:

Awareness and reach, especially for new customers
A digital shopfront that introduces your business clearly
Lead generation, even outside working hours
Bookings and payments, depending on your business type
Linking everything together, from social media to Google
Digital marketing, including search engines and ads
Additional revenue opportunities
Branding and credibility
Clear product or service information
Establishing trust and authority in your sector
Customer support, through FAQs and guidance
Social proof, such as reviews and testimonials

You don’t need all of this at once, but a website gives you the option to grow into it.

Let’s break it down further.

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Your website is always working

One of the biggest advantages of a website is simple: it’s always open.

Unlike a physical shop, office, or phone line, a website works 24 hours a day. Potential customers can find you in the evening, at weekends, or while you’re busy on a job. They can read about your services, check prices, look at reviews, and decide whether to contact you, without needing to speak to anyone.

For many types of businesses, customers now expect to be able to research, book, or buy online, the decision often starts with a website.

Customers expect to find you online

When someone hears about your business, one of the first things they’ll often do is search for you online. If they can’t find a website, it can raise doubts:

Is this business still operating?
Are they professional?
Are the details up to date?

Whilst there are other channels to operate under such social media pages. A website does tend to carry more weight. It doesn’t need to be flashy. It just needs to exist, be clear, and feel trustworthy.

A website supports more than just marketing

A common misconception is that websites are only for marketing. In reality, a good website supports almost every part of the business.

Supporting sales

Your website acts like a digital salesperson. It explains what you do, who you help, and how to get started. It can answer common questions before someone ever contacts you, making enquiries warmer and easier to convert.

For some businesses, the website can also take bookings, payments, or deposits automatically, reducing admin and saving time.

Supporting marketing

All marketing needs a destination. Whether someone clicks from Google, social media, or an online advert, they usually end up on a website.

Unlike social platforms, your website is something you own and control. You’re not relying on changing algorithms or platform rules.

Supporting finances

A clear website can reduce repeated phone calls and emails by answering common questions upfront. FAQs, pricing explanations, and service pages save time and time is money. Online payments or booking systems can also improve cash flow and reduce no-shows.

Supporting operations and growth

Your website becomes a single, reliable source of accurate information about your business. As you grow, it’s far easier to update one website than manage information across multiple platforms.

Helping you compete

If your competitors have websites and you don’t, customers may choose them by default. If they don’t, having a website instantly helps you stand out as more professional and established.

How a website helps people search you

You may hear the term “SEO” and feel it sounds complicated. In simple terms, SEO helps your website appear when people search on Google.

If someone searches for:

“electrician near me”
“accountant in [town]”
“wedding photographer [location]”

A website gives your business the chance to appear in those results. Without one, you’re invisible to those customers even though they’re actively looking for a service like yours.

Unlike paid advertising, SEO can continue to bring visitors over time without ongoing ad spend.

What a small business website actually needs

A good website doesn’t need hundreds of pages or complex features. It needs to be clear, trustworthy, and easy to use.

Home page

This should quickly explain who you help, what you do, and what someone should do next. Clear messaging and a simple call to action matter more than design tricks.

Services or products

Explain what you offer in simple language. Be clear about what’s included, who it’s for, and how pricing works (even if exact prices aren’t shown).

About page

People buy from people. This page builds trust by showing the human side of the business, your experience, values, and story.

Reviews or testimonials

Social proof reassures potential customers that others have had a good experience with you.

Contact page

Make it easy to get in touch. Include phone, email, location (if relevant), opening hours, and a simple contact form.

Calls to Action – turning visitors into sales

Beyond basic pages, a website should guide people towards taking action.

Clear calls to action tell visitors what to do next, whether that’s booking a call, requesting a quote, or making a purchase.
A simple “how to buy” or “how to book” explanation reduces hesitation.

FAQs

A frequently asked questions section helps address common concerns before customers even get in touch. This saves you time answering the same questions repeatedly and helps potential customers feel more confident about taking the next step. Clear FAQs can remove uncertainty and reduce hesitation, especially for people who are comparing options.

Privacy policies and legal pages

Privacy policies and other legal pages are also important. They explain how customer data is handled and help your business meet legal requirements such as GDPR. For some industries, such as finance or other regulated sectors, additional disclosures may be required. These pages help protect both your customers and your business, while also building trust.

Ongoing website management

Many business owners worry that a website will be difficult to manage. In reality, most websites need only basic attention.

You’ll need to keep information accurate, update content occasionally, and ensure security updates are applied. There are costs involved, but they’re usually predictable and far lower than traditional advertising.

A website doesn’t need constant work it just needs to be looked after, unless you require more advanced tech to operate.

How much does a small business website cost?

One of the biggest worries for small business owners is cost, and understandably so.

The good news is that a small business website doesn’t have to be expensive to be effective. Costs usually fall into two parts: setup and ongoing running costs.

Setup costs vary depending on how complex the site is, but many small businesses start with a simple, professional website that includes the key pages and grows later if needed. Ongoing costs are typically much lower and cover things like hosting, security updates, and occasional content changes.

What matters most is not spending as little as possible but spending wisely. A clear, well-structured website that brings in enquiries can quickly pay for itself. Sites like Wix and Squarespace, provide tools that help you do this for a small fee per month, from £9 or £12 a month, for the most limited package.

A website is an asset, not an expense

You don’t need to start big. A clear, simple website that does the basics well is often more effective than something complicated and expensive.

If you think of your website as a long-term business asset, rather than a one-off cost, its value becomes much easier to see.

What happens if you don’t have a website?

Not having a website doesn’t mean your business will necessarily be impeded but it does create limitations.

Without a website:

Customers may struggle to find accurate information

You rely heavily on third-party platforms
You miss out on customers searching online
Competitors with websites may appear more established
You spend more time answering repeat questions

Over time, this can mean missed opportunities rather than sudden problems. Many businesses don’t notice what they’re losing because they never see the enquiries that didn’t happen.

A website helps ensure your business is visible, credible, and easy to engage with, even when you’re busy elsewhere.

Protect your business with the right business insurance

Protectivity offers affordable business insurance suitable for self-employed, sole traders, limited companies and entrepreneurs, specialising in a wide range of different activities.

Public liability is included with options to add extras such as equipment cover, employers’ liability and other specific industry add-ons.

Explore the full list of business insurance we provide today – or get in touch with our team to discuss your specific requirements.

Sources: https://www.forbes.com/advisor/uk/business/software/website-statistics/

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11:36:11 GMT • 5 February 2026

What is PAYE?

By Chris Trotman

3 February 2026

•

9 mins read

Contributors

Chris has been with Starpeak Insurance Solutions for 3 years. Before starting with the company, Chris was involve...

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Taking on employees is a major step for any business, but it also brings new legal and financial responsibilities. One of the most important systems employers must understand is PAYE. While the term is commonly used, its meaning and what it requires of employers are not always fully understood, particularly by small or growing businesses.

PAYE plays a central role in how income tax and National Insurance contributions are collected in the UK. According to Gov.UK/ONS data, around 2.73 million UK businesses were registered for PAYE (and/or VAT) as of March 2025, highlighting how widely used the PAYE system is for deducting tax and National Insurance from employee wages and reporting to HMRC. Operating PAYE correctly is not just a payroll task. It forms part of an employer’s wider compliance duties and risk management.

This guide explains what PAYE is, how PAYE tax works, why employers pay National Insurance, what employer PAYE references are, and how PAYE differs from self-employed tax arrangements. It is designed to help employers understand their responsibilities clearly and confidently.

What is PAYE?

PAYE, short for Pay As You Earn, is the system HM Revenue and Customs uses to collect income tax and National Insurance contributions from employees through their wages. Instead of employees paying tax in a lump sum at the end of the year, PAYE spreads tax payments across the year, deducting the correct amounts each time an employee is paid.

Under PAYE, the employer is responsible for calculating deductions based on each employee’s earnings and tax code. These deductions are then reported to HM Revenue and Customs and paid over on a regular basis.

In practice, PAYE ensures tax and National Insurance are collected consistently. This reduces the risk of large unpaid tax bills and helps employees remain up to date with their obligations automatically.

PAYE meaning for employers

For employers, PAYE represents a legal obligation rather than a choice. If you employ staff and pay them above the Lower Earnings Limit, you must register as an employer with HM Revenue and Customs and operate PAYE as part of your payroll.

This responsibility includes:

Calculating income tax and National Insurance deductions correctly
Submitting payroll information using real time information
Paying deductions and employer contributions by the required deadlines

Failing to operate PAYE correctly can result in penalties, interest charges, and enforcement action. From a business perspective, accurate PAYE processes help reduce legal and financial risk while demonstrating compliance with employment law.

What is PAYE tax?

PAYE tax refers specifically to the income tax deducted from an employee’s wages under the PAYE system. The amount deducted depends on how much the employee earns and the tax code provided by HM Revenue and Customs.

Tax codes determine how much tax-free income an employee is entitled to receive. Employers must apply the correct tax code for each employee to ensure deductions are accurate. If the wrong tax code is used, employees may pay too much or too little tax, which can lead to complaints or adjustments later.

HM Revenue and Customs guidance explains that PAYE helps employees pay tax gradually, making earnings more predictable and reducing the likelihood of unexpected tax bills at the end of the tax year.

Paying PAYE as an employer

Paying PAYE involves more than deducting tax from wages. Employers must report payroll information every time employees are paid using the Real Time Information system. This allows HM Revenue and Customs to keep records up to date throughout the year.

Each payroll submission includes details of employee earnings, income tax deductions, employee National Insurance, and employer National Insurance contributions. Payments to HM Revenue and Customs are usually made monthly, although some small employers may be eligible to pay quarterly.

Meeting PAYE deadlines is essential. Late submissions or payments can trigger penalties and interest, making reliable payroll systems an important part of running a compliant business.

Why do employers pay National Insurance?

Employers are required to pay Employer National Insurance contributions in addition to deducting employee contributions. This is a separate cost that sits on top of wages and should be factored into hiring and budgeting decisions.

Employer National Insurance helps fund state benefits and services including the NHS, state pensions, and statutory payments such as sick pay and maternity pay. According to GOV.UK, employers pay National Insurance on employee earnings above a set threshold at a rate defined by legislation.

From an Employers’ Liability perspective, paying National Insurance correctly forms part of an employer’s legal responsibility to contribute towards worker protections and benefits.

What is an employer PAYE reference?

An Employer PAYE Reference is a unique identifier issued by HM Revenue and Customs when a business registers as an employer. It is used to identify the employer’s PAYE account and link payroll submissions and payments to the correct business.

This reference is required when contacting HM Revenue and Customs and appears on documents such as employee P60s. Employers must quote it whenever they submit payroll information or make PAYE payments to ensure records are updated correctly.

What is an employer’s PAYE tax reference?

The employer’s PAYE tax reference is often referred to in the same way as the employer PAYE reference. It usually consists of two parts, an HM Revenue and Customs office number and an employer reference number.

This reference allows HM Revenue and Customs to track PAYE tax payments, National Insurance contributions, and payroll reports accurately. Keeping this information secure and accessible helps employers resolve queries quickly and maintain accurate records.

What is employers’ PAYE?

Employers’ PAYE refers to the full set of responsibilities employers have under the PAYE system. This includes deducting tax and employee National Insurance, paying employer National Insurance, reporting payroll data, and meeting payment deadlines.

These responsibilities sit alongside wider employer duties such as maintaining employment records, providing statutory workplace protections, and holding Employers’ Liability insurance. Together, they help protect employees and reduce legal and financial risk for businesses.

What is the difference between PAYE and Self-Employed Tax?

The difference between PAYE and self-employed tax arrangements often causes confusion. Under PAYE, employees have tax and National Insurance deducted automatically by their employer. Payments are spread across the year, and employees generally do not need to complete a Self-Assessment tax return.

For self-employed individuals, responsibility for tax sits with the individual. They must calculate and pay income tax and National Insurance through Self-Assessment, usually making payments once or twice a year.

Incorrectly classifying workers as self-employed when they should be treated as employees can result in significant tax liabilities and penalties. Employers should follow HM Revenue and Customs guidance on employment status carefully.

PAYE, compliance, and Employers’ Liability

PAYE forms part of an employer’s broader compliance obligations. Accurate payroll records and timely payments help demonstrate that a business is meeting its responsibilities under employment and tax law.

From an Employers’ Liability perspective, good PAYE practices support clearer documentation if disputes arise and reduce the risk of regulatory action. While Employers’ Liability insurance protects businesses if an employee makes a claim relating to work related injury or illness, insurers may still expect employers to meet statutory obligations such as PAYE compliance.

Expert commentary: why PAYE accuracy matters

Payroll and tax errors are a common source of disputes between employers and employees. Even small mistakes can damage trust and result in HM Revenue and Customs intervention.

HMRC guidance for employers emphasise that PAYE must be set up, monitored and maintained currently, including reporting new employees, when tax rules change or for keeping payroll records up to date (Gov.uk). Investing time in accuracy and compliance early can prevent costly issues later.

Conclusion: understanding PAYE as an employer

PAYE is a fundamental part of employing staff in the UK. It ensures income tax and National Insurance contributions are collected efficiently and supports employee access to state benefits.

For employers, PAYE represents an ongoing responsibility that extends beyond payroll administration. Accurate PAYE management supports legal compliance, reduces financial risk, and forms part of responsible employment practice alongside holding Employers’ Liability insurance.

By understanding what PAYE is, how PAYE tax works, and what employers are required to pay, businesses can meet their obligations confidently and focus on growing their workforce in a compliant and sustainable way.

Protect your business and your employees with Employers’ Liability Insurance

Taking on employees is an exciting step, but it also comes with legal and financial responsibilities. Even with PAYE and accurate payroll systems in place, accidents or work-related injuries can happen, and these can carry significant costs for your business.

This is where Employers’ Liability insurance from Protectivity comes in. It provides cover if an employee is injured or becomes ill as a result of their work, helping protect your business from claims and supporting your legal obligations.

Whether you’re a small business hiring your first staff member or a growing company with multiple employees, Employers’ Liability insurance complements your PAYE and payroll systems. It ensures you’re meeting your legal responsibilities while giving you peace of mind that your employees and your business are protected.

To find out more, head to Employers’ Liability Insurance webpage for a quote, or give our sales team a call on 01494 887 909.

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12:39:14 GMT • 5 February 2026

How to register a business in the UK

29 January 2026

•

9 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

Essential steps for independent businesses

Starting a business can combine freedom and ambition; the freedom to work your way and build something of your own. That independence is best supported by practical and legal decisions that create a strong foundation for long-term success. One of the first steps is registering.

As of March 2025, there were 5,427,787 registered businesses in the UK. 99% are SMEs, around 3 million operate as sole traders, and roughly 37% are registered as limited companies.

That mix is exactly why getting the admin right matters. For most independent businesses, the goal isn’t to create paperwork, it’s to set up a clean, efficient foundation that helps you avoid friction (and avoidable costs) later on.

Registering your business properly from the start helps you:

Stay compliant with UK law
Avoid unnecessary fines or late fees
Operate efficiently and confidently
Build credibility with clients, suppliers, and partners

If you’re setting up a limited company, it’s especially important to understand your responsibilities as a company director. Missing key filings or submitting inaccurate information can lead to penalties and in serious cases, directors can face prosecution or disqualification for failing to file required documents or providing false information.

This guide walks you through how to register a business in the UK, step by step, with a practical, supportive approach tailored to sole traders, freelancers, and micro-enterprises.

When do you need to register a business?

Not every business needs to register immediately, but it’s a step you’ll need to complete at some point. This is often driven by when you start trading, how much you earn, and specific registration deadlines.

You’ll usually need to register when:

You start earning money from your activity
You intend to trade on a regular basis
Your income exceeds the £1,000 trading allowance
You want to formalise your business for tax, banking, or credibility reasons

Consider the tax year you start trading in. Register by the 5^th October before your first tax return (in January). Registering too late can lead to penalties; registering too early can create unnecessary admin.

How long does business registration take?

Sole trader registration: same day
Limited company registration: usually within 24 hours
Trademarks: several months

Plan ahead if you’re working to a launch date. Registration isn’t bureaucracy for its own sake, it’s about protecting yourself, your income, and your time, and putting the right foundations in place as your business grows.

Get Business Insurance from Protectivity

https://www.gov.uk/government/statistics/companies-register-activities-statistical-release-april-2024-to-march-2025/companies-register-activities-april-2024-to-march-2025
https://www.business.gov.uk/support/business-structures-governance-and-ethics/comparing-business-structures

How to register a business

Registering a business starts with two key decisions: choosing the business type that’s right for you and following the registration process accurately. While it can feel daunting at first, for most independent businesses the process is short, straightforward, and completed online.

The steps you need to take depend on whether you’re registering as a sole trader or setting up a limited company, both common options for freelancers, contractors, and micro-businesses. The sections list each route clearly and simply.

Registering as a Sole Trader

Choose your business name
Register for self-assessment with HM Revenue & Customs
Set up a simple system for tracking income and expenses
Understand your annual self-assessment tax deadline

Typically, you will register as a sole trader if you’re earning income from a side business, over £1000. You could be a freelancer, contractor and employer, although you could also be registered as a limited company.

Registering a Limited Company

Choose a company name
Check availability and restrictions
Register with Companies House
Appoint directors and shareholders
Set up a business bank account

If you’re unsure which structure suits your situation best, it’s worth taking time to understand the differences before registering, as changing later can involve additional admin and cost.

How much does it cost to register a business in the UK?

Core registration costs

Sole trader registration: £0
Limited company registration: £12 (online)

Other costs to consider

While optional, these can improve efficiency and reduce risk:

Accounting or bookkeeping software
Accountant support
Business insurance
Website and domain
Trademarks
Licences or certifications

Choosing and registering a business name

There is so much to consider choosing your name and it can be a fun part of starting out. Yet, as with many official processes, rules apply. Whilst you may want to delve into brand and product considerations, the important thing is to register the chosen name exactly right. No spelling errors, using appropriate words and avoiding a name already registered.

Business name rules

Sole traders can trade under their own name or a business name
Limited companies must use a unique registered name
Certain words require permission (e.g. “Bank”, “Royal”)
Consider ‘sensitive’ words. Names must not be misleading or offensive

Checking name availability

Before committing, check:

Companies House name availability
Domain name availability
Social media handles

Other than your Companies House name; domain and social media, names can be adapted, however keeping things consistent can avoid future rebranding costs and confusion.

Trading name vs registered name

This is a common area of uncertainty.

Registered name: the official legal name (used on records and filings)
Trading name: the name you use publicly with customers

You can trade under a different name as long as:

You clearly disclose the registered name on invoices and websites
You’re not misleading customers

This flexibility is useful for freelancers or businesses running multiple brands.

Should you trademark your business name?

Registering a business name does not automatically protect it and it could lead to costly battles if you have to challenge another business, or if it has not been trademarked.

What a Trademark does

Protects your brand name, logo, or slogan
Prevents others in your industry from using it
Strengthens your legal position

How to Trademark a name

In the UK, trademarks are registered through the Intellectual Property Office.

For many micro businesses, trademarking isn’t urgent but it’s worth considering if your brand becomes central to your value. You could face future legal battles or challenges if someone opts for the same name or similar.

Common mistakes made by independent businesses

Most registration issues don’t come from carelessness; they come from rushing decisions or not knowing what matters yet. Being aware of the most common pitfalls can save time, money, and unnecessary stress.

Choosing the wrong business structure

Take time to understand the differences between a sole trader and a limited company before registering. For many early-stage or one-person businesses, starting as a sole trader offers flexibility and simplicity and you can always change structure later if your business grows or your needs change.

Mixing personal and business finances

Set up a dedicated business bank account as early as possible. Even when it’s not legally required, keeping finances separate improves organisation, saves time, and makes it easier to understand your business performance.

Choosing a business name already in use

Always check name availability before registering. Search company registers, domain availability, and online platforms to ensure your chosen name is distinct and usable.

Spelling errors in business names

Double-check spelling carefully and review naming rules before submitting your application. Make sure any restricted or sensitive terms are permitted or choose a simpler alternative that avoids delays.

Using an unsuitable registered address

Consider carefully which address you use when registering. If privacy is important, alternatives such as registered office services can provide a professional solution without exposing your home address.

Appointing an ineligible director

Before registering a limited company, ensure all directors meet eligibility requirements and understand their legal responsibilities. This avoids complications and protects the business from avoidable risk.

Paperwork, accounts, and ongoing responsibilities

Admin is rarely the reason people start a business, but it plays a vital role in keeping everything running smoothly behind the scenes. Clear records, timely filings, and the right financial setup don’t just help you stay compliant; they also save time, reduce stress, and make it easier to understand how your business is really performing.

Accounting and tax

Once your business is registered, you’ll need to ensure you’re up on tax reporting to help track performance throughout the year.

Keep accurate records of income and expenses
Understand tax deadlines
File self-assessment or company accounts on time

Business bank accounts

Limited companies are legally required to have a separate business bank account, as the company is a distinct legal entity. While sole traders aren’t required to do this, having a dedicated business account is strongly recommended.

Keeping business and personal finances separate makes record-keeping far simpler, improves clarity, and can save significant time when it comes to tax returns or working with an accountant.

Business insurance

The type of insurance you need depends on the nature of your work, but it’s an important part of managing risk as your business grows.

Common types to consider include public liability insurance (to protect against claims from third parties), professional indemnity insurance (for advice or services provided), and employers’ liability insurance if you hire staff.

Summary

Every independent business is unique, but the foundations are the same. Registering your business correctly helps you stay compliant, avoid unnecessary costs, and focus on the work you care about.

Admin doesn’t need to be overwhelming. With the right setup from the start, it becomes a quiet system working in the background, supporting your independence, not restricting it.

For those concerned about the repercussions of errors there are business registration companies that, for a cost, will assist you with the process. For other unexpected costs, make sure you consider the right business insurance for your set up.

Once registered you’ll need the right business insurance

Protectivity can offer a variety of business insurance policies, helping protect your income, your reputation, and your ability to keep trading if something goes wrong.

Whether you’re a sole trader, freelancer, or running a limited company, having the right cover in place can provide additional support alongside your tax compliance, especially as your business grows or takes on new responsibilities.

Explore the range of business insurance policies offered by Protectivity.

Sources:

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09:46:13 GMT • 29 January 2026

What is a Purchase Order?

27 January 2026

•

9 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

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Managing finances is one of the most demanding aspects of running a small business. As operations grow, so do the number of suppliers, invoices, and payments that need to be tracked accurately. Without clear systems in place, this can quickly lead to confusion, overspending, or disputes. One straightforward but highly effective tool that helps bring order to this process is the purchase order.

Purchase orders provide businesses with a clear record of what has been agreed before any money changes hands. According to guidance published on GOV.UK, businesses are expected to keep accurate records of financial transactions and agreements to meet accounting and tax obligations. Purchase orders support this requirement by formally documenting purchases in advance, rather than relying on informal communication.

This guide explains what purchase orders are, how they work in practice, the role of purchase order numbers, and how purchase orders link with invoicing and payment systems. It is designed to help UK small business owners decide whether purchase orders could improve financial control and reduce risk.

What is a Purchase Order (PO)?

A purchase order (PO) is a formal document issued by a buyer to a supplier that confirms the details of a proposed purchase. It sets out what goods or services are being ordered, the quantity, the agreed price, delivery timescales, and payment terms.

Once the supplier accepts the purchase order, it becomes a legally binding agreement. This means both parties are committed to the terms outlined in the document. For the buyer, this offers reassurance that pricing and delivery conditions are fixed. For the supplier, it provides confidence that payment will be made once the order is fulfilled.

Although purchase orders are often associated with larger organisations, they can be equally valuable for small businesses and sole traders. Any business that orders goods or services on credit, works with multiple suppliers, or wants clearer oversight of spending can benefit from using purchase orders consistently.

What are Purchase Orders used for?

Purchase orders act as a control point between deciding to buy something and paying for it. Rather than relying on emails or verbal agreements, a purchase order clearly records the transaction in advance and ensures everyone involved understands what has been agreed.

In practical terms, purchase orders are used to:

Control spending by ensuring purchases are approved before money is committed

Reduce misunderstandings by clearly documenting prices, quantities, and terms

Simplify invoice checking by allowing invoices to be matched to approved orders

Improve cash flow visibility by showing upcoming financial commitments

They are particularly useful for businesses with multiple suppliers or more than one person involved in ordering. By creating a clear audit trail, purchase orders reduce the likelihood of disputes and help businesses stay organised as they grow.

Purchase orders also support better budgeting. By raising a PO before committing to spend, businesses gain visibility over upcoming costs, allowing them to plan payments more effectively. When combined with reliable payment tools, this can significantly reduce financial pressure. To find out about choosing the right setup, take a look at our blog on best payment systems for small businesses in the UK.

What is a Purchase Order Number?

A purchase order number is a unique reference assigned to each purchase order. Its purpose is to allow both the buyer and supplier to track the order throughout its lifecycle, from creation through to payment.

The purchase order number links together all related documents, including delivery notes and invoices. When a supplier submits an invoice, referencing the PO number allows the buyer to quickly verify that the charges match what was originally agreed. This reduces delays, avoids duplicate payments, and simplifies bookkeeping.

As a business grows and transaction volumes increase, PO numbers become increasingly important. Without them, it can be difficult to trace orders or resolve disputes efficiently, particularly when several purchases are made with the same supplier.

How do Purchase Orders work?

While systems may vary, the way purchase orders work is generally consistent across businesses. The process begins when a need for goods or services is identified. Before placing the order, a purchase order is created and approved, ensuring the spend is authorised.

Once sent to the supplier and accepted, the supplier delivers the goods or completes the service as agreed. After delivery, the supplier issues an invoice that references the purchase order number. The buyer then checks the invoice against the original purchase order before making payment.

This process creates a clear audit trail and ensures businesses only pay for what they have approved and received. From an accounting perspective, this aligns with HMRC expectations around maintaining accurate records and supporting evidence for business expenses.

How to create a Purchase Order

Creating a purchase order does not need to be complicated. Many small businesses begin with simple templates that include all the essential details. As operations become more complex, accounting software can automate much of the process and reduce manual errors.

A purchase order typically includes business and supplier details, a description of the goods or services, pricing, delivery information, and payment terms, along with the unique PO number. What matters most is consistency. Using the same format and numbering system makes purchase orders far easier to manage over time.

As financial administration grows, some businesses choose to seek professional support to ensure systems remain efficient and compliant. If you are unsure whether your current processes are fit for purpose, our guide on hiring an accountant for a small business explores when expert advice can add value.

How to raise a Purchase Order in a Small Business

To “raise” a purchase order simply means to formally issue it to a supplier before any work begins. This step is important because it confirms that the purchase has been approved and that both parties understand the agreed terms.

For small businesses, raising purchase orders can feel like an extra administrative step, but it often saves time later. Clear documentation reduces the need for back-and-forth communication and makes invoice checking far more straightforward. Even in businesses with small teams, purchase orders can help establish financial discipline and accountability.

Purchase Orders and Invoicing: what’s the difference?

Purchase orders and invoices are closely linked but serve different purposes. A purchase order is issued before goods or services are supplied and confirms what the buyer has agreed to purchase. An invoice is issued after delivery and requests payment for what has been supplied.

When used together, purchase orders and invoices create a strong financial control. The purchase order confirms approval, while the invoice confirms the charge. Matching the two ensures businesses only pay for what was agreed and received.

This is particularly important for VAT-registered businesses, as HMRC requires accurate records to support VAT returns and expense claims. Purchase orders help demonstrate that costs were legitimate business expenses.

Do Small Businesses need Purchase Orders?

There is no legal requirement for most small businesses to use purchase orders. However, many find them increasingly valuable as operations grow and transaction volumes increase.

Purchase orders are especially useful if you:

Work with multiple suppliers or contractors

Place regular or repeat orders

Want clearer control over spending and approvals

Need stronger financial records for tax, funding, or insurance purposes

They can also improve professionalism. Suppliers often view purchase orders as a sign that a business is organised and financially reliable, which can strengthen working relationships and reduce the risk of disputes.

Purchase Orders and business risk management

Although purchase orders are primarily an administrative tool, they also play an important role in managing business risk. Clear documentation helps reduce disagreements with suppliers and provides evidence if disputes arise.

From a business insurance perspective, accurate purchasing records support smoother resolution of claims where supplier issues disrupt operations. They also demonstrate that a business has appropriate financial controls in place, which can be important when dealing with insurers, lenders, or regulatory bodies.

Why Purchase Orders are worth considering

Purchase orders provide clarity, control, and accountability — all of which are particularly valuable for small businesses managing limited time and resources. They help prevent disputes, improve visibility over spending, and support compliance with UK accounting expectations.

While they introduce a small additional step into the purchasing process, the long-term benefits often outweigh the effort. By documenting agreements clearly and linking purchasing with invoicing and payments, purchase orders can help businesses operate more smoothly and with greater confidence.

Protect your business beyond Purchase Orders with Business Insurance

Using purchase orders helps you control spending, reduce disputes, and keep clear records — but it doesn’t protect you from every risk your business could face. Even with strong financial systems, unexpected events like client claims, accidents, or damage to your tools and equipment can still have a significant financial impact.

This is where Protectivity’s Business Insurance comes in. The policy can be tailored to your business and can offer cover such as public liability, professional indemnity, equipment cover, employers liability and more (depending on your business profession) — helping protect you if a claim or loss occurs.

For small businesses that raise purchase orders, this kind of insurance can work alongside your purchasing controls to safeguard your income, reputation and ability to keep trading if the unexpected happens. Insurance offers a safety net that purchase orders on their own cannot provide, giving you confidence to focus on growth and daytoday operations.

Find out more and get a quote today!

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09:19:13 GMT • 22 January 2026

What is the National Minimum Wage for employers

By Chris Trotman

22 January 2026

•

6 mins read

Contributors

Chris has been with Starpeak Insurance Solutions for 3 years. Before starting with the company, Chris was involve...

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The National Minimum Wage plays a crucial role in protecting workers’ pay while shaping employment costs for businesses across the UK. Over the last two years, minimum wage rates have risen sharply, reflecting cost-of-living pressures and commitments made by the UK Government to raise pay at the lowest end of the labour market. According to gov.uk, the most recent increases represent some of the largest annual uplifts since the minimum wage was introduced.

This guide explains what the National Minimum Wage is, how it changed in 2024 and 2025, how it compares to average UK earnings, and what these changes mean in practice for employers – particularly small businesses managing rising operational costs. We also explore sector-specific impacts and Employers’ Liability considerations, helping employers navigate compliance while managing costs.

What is National Minimum Wage UK?

The National Minimum Wage is the legal minimum hourly pay that most workers in the UK are entitled to receive. It applies to employees and workers and varies depending on age and whether the individual is an apprentice.

Alongside the National Minimum Wage, the UK also operates the National Living Wage, which is the highest statutory rate and applies to adult workers. According to the Government website (gov.uk), these rates are reviewed annually following recommendations from the independent Low Pay Commission, which considers economic conditions, employment levels, and the cost of living.

Employers are legally required to pay the correct rate. HM Revenue & Customs, acting on behalf of the UK Government, enforces compliance. Underpayment can result in penalties, repayment of arrears, and public naming of non-compliant businesses, as outlined on the Government website.

What’s the new National Minimum Wage pay rate?

April 2024 changes

According to official guidance published on gov.uk, minimum wage rates increased on the 1^st of April 2024, including a significant rise to the National Living Wage. The UK Government stated that the uplift was intended to support low-paid workers while maintaining economic stability.

Minimum wage 2025

From the 1^st of April 2025, further increases came into force. According to the Government website:

The National Living Wage increased to £12.21 per hour for workers aged 21 and over
The 18–20 rate rose to £10.00 per hour
The 16–17 and apprentice rate increased to £7.55 per hour
The accommodation offset increased to £10.66 per day

The UK Government has confirmed that these increases are designed to move minimum pay closer to typical earnings while supporting businesses’ ability to create and sustain jobs.

What is the minimum wage compared to average pay?

To put minimum wage levels into context, it is useful to compare them with average UK earnings.

According to the , median hourly pay for full-time employees in the UK is around £18 per hour, with median annual earnings of approximately £37,000–£39,000 before tax. This shows that, even after the 2025 increase, the National Living Wage remains significantly below the UK average wage.

The UK Government has stated that the National Living Wage is set as a proportion of median earnings rather than matching average pay outright. This approach is intended to protect low-paid workers while limiting the risk of job losses, as explained in Government publications.

Sector-specific impacts

Minimum wage changes affect some industries more than others. Key examples include:

Hospitality and retail: These sectors employ a high proportion of minimum-wage staff. Wage rises increase payroll costs but can improve retention, motivation, and service quality.
Social care: Higher wages help retain essential staff but increase costs for small care providers and charities.
Youth employment and apprenticeships: Rising rates encourage young people to enter the workforce, but businesses providing training may need to adjust their budgets.

Understanding sector-specific impacts allows employers to plan budgets, adjust pricing, and structure hours to remain profitable while complying with statutory wage obligations.

How rising minimum wages affect employers and small businesses

For employers, especially small businesses, rising statutory wage rates can have a noticeable impact:

Payroll costs increase, especially in sectors with many lower-paid roles
Employers may need to review staffing levels, pricing strategies, or operating hours
Businesses face combined cost pressures, including wage increases alongside National Insurance, rent, and utilities

However, the UK Government and Low Pay Commission have also highlighted potential benefits, including improved staff retention, reduced recruitment costs, and higher motivation – all of which can offset some of the financial pressure over time.

Employers’ liability considerations

From an Employers’ Liability perspective, paying the correct minimum wage is a key compliance obligation. Incorrect payment can expose businesses to:

Legal claims and financial penalties
Employment tribunal cases
Reputational damage and loss of staff trust

Practical advice for employers includes:

Regularly auditing payroll systems to ensure compliance
Training HR staff on minimum wage updates
Documenting working hours and pay rates to provide evidence in case of disputes
Planning for wage increases in budgeting and pricing strategies

Compliance with the National Minimum Wage is not just a legal requirement – it is also an essential part of business operations risk management. Maintaining accurate pay practices reduces the likelihood of costly claims and helps protect business assets.

Conclusion

The National Minimum Wage and National Living Wage remain central to employment law in the UK. Between 2024 and 2025, rates rose significantly, reflecting the UK Government’s objective of improving pay for low-income workers while maintaining economic balance.

For employees, these changes provide greater income security. For employers, they underline the importance of accurate payroll management, legal compliance, and forward planning. Understanding sector-specific impacts and the Employers’ Liability implications ensures businesses can navigate wage changes confidently while protecting staff and business operations.

By combining awareness of wage trends, compliance obligations, and practical business planning, employers can manage costs effectively while supporting their workforce and meeting statutory responsibilities.

Employers’ Liability insurance from Protectivity

As a small business owner, having Employers’ Liability insurance is essential because it protects your business financially and legally if an employee is injured or becomes ill as a result of their work for you. Accidents can happen even in workplaces with strong health and safety practices, and without proper coverage, you could face significant compensation costs, legal fees, and potential regulatory fines.

This type of insurance also shows that you take your responsibilities seriously as an employer. It helps you attract and retain staff by giving them confidence that they are protected while working for your business.

Additionally, Employers’ Liability insurance provides peace of mind, ensuring your business can continue to operate without the threat of financial claims. You can explore tailored cover for your business and get a quote today.

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12:44:57 GMT • 19 January 2026

What is an SME? Small business status explained

20 January 2026

•

10 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

If you run an independent business in the UK, whether you’re a freelancer, sole trader, or running a small, limited company, you’ve probably come across the term SME. It often appears on forms, insurance applications, funding information, or government guidance, sometimes without much explanation.

In fact, over 99% of businesses in the UK are classed as SMEs, which means most people working for themselves or running small businesses are already part of this group.

But what does SME actually mean? And why does it matter for your business?

SME stands for Small or Medium-sized Enterprise. In simple terms, it’s a way of describing the size of a business, rather than how it’s set up legally. A sole trader can be an SME, a limited company can be an SME, and a business can fall under the SME umbrella whether it’s just starting out or has been established for years.

In most everyday UK contexts, an SME is a business with fewer than 250 employees, with many independent businesses falling into the micro business category.

This guide explains what SME means in the UK, how it’s defined, who qualifies, and when your SME status becomes important, using clear, practical information designed to support small, independent businesses.

What counts as an SME in the UK?

In the UK, SME is a broad term that’s used in lots of everyday business situations, from government support and funding, to insurance, finance, and supplier forms.

Most commonly, SMEs are grouped like this:

Business size	Employees	Turnover / balance sheet (approx.)
Micro	Fewer than 10	Up to €2m
Small	Fewer than 50	Up to €10m
Medium	Fewer than 250	Up to €50m turnover or €43m balance sheet

Source: gov.uk/government/publications/fcdo-small-to-medium-sized-enterprise-sme-action-plan

These categories are widely referenced by UK Government departments and regulators, even though the thresholds are shown in euros, the figures are equivalent in GBP(£s).

If you’re a sole trader, freelancer, or small service-based business, you’ll almost always fall into the micro business category.

It’s also worth knowing that not every organisation uses exactly the same definition. So, if you’re filling in a form or applying for something specific (like insurance, finance, or a grant), it’s always best to follow the definition they provide.

SME size vs business structure

It’s very common for small business owners to wonder whether SME status depends on how their business is set up.

Put simply:

Business structure is about how your business is legally organised

(for example, sole trader, partnership, or limited company)

SME status is about the size of your business

They’re connected – but they’re not the same thing.

For example:

A one-person limited company is usually classed as a micro-SME
A partnership with a handful of staff is still an SME
A freelancer or self-employed person with no employees is typically considered a micro business and SME

So, if you run an independent business; whether that’s pet care, hairdressing, catering, creative services, or another specialist trade, it’s very likely you already fall under the SME umbrella.

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What is the SME business landscape in the UK?

SMEs play a vital role in the UK economy and make up the vast majority of businesses operating today. While large companies often get the most attention, it’s small and independent businesses that keep many local communities and specialist services running.

In fact, there are around 5.7 million private sector businesses in the UK, and, as mentioned, over 99% of them are classed as SMEs. Together, these businesses employ around 60% of the private sector workforce, and around three-quarters operate with no employees at all beyond the owner. This reflects how common sole traders, freelancers, and very small teams are across the country.

For many independent business owners, this can be reassuring. Running a small business, even on your own, isn’t the exception in the UK economy, it’s more common than you might think.

Common SME sectors

SMEs operate across every industry, but they are especially common in sectors built around skills, services, and personal expertise. These include construction, professional services (such as consultants, IT specialists, marketers, designers, and legal professionals), wholesale and retail, and a wide range of trades, creative industries, and digital services.

This also covers many niche, service-based businesses:

Pet care and pet grooming
Hair and beauty
Catering
Photography
Other creative or hands-on professions.

These types of businesses are often independently run, locally focused, and built around specialist knowledge or personal service.

If you run a small business in the UK, there’s a very strong chance you’re already part of this SME majority, alongside millions of other independent businesses doing similar things in their own communities and sectors.

When does SME status actually matter?

SME status isn’t something most small business owners think about every day, and that’s completely normal. For many sole traders, freelancers, and small service-based businesses, it only really comes up at certain moments.

Below are some of the main situations where SME status is commonly used.

1. Business registration and reporting

For limited companies, the size of your business can influence how certain administrative and reporting requirements work.

This can include:

Financial reporting requirements
Whether an audit is required
How accounts are prepared and filed

These rules are designed to reflect the scale of a business, so smaller companies often have simpler requirements. As a business grows, these obligations can change, which is why SME size is sometimes reviewed over time.

2. Tax, finance, and funding

SME status is also commonly referenced when businesses apply for finance or support. You may see it used when:

Applying for business loans or finance
Accessing government-backed schemes
Assessing eligibility for grants, support, or incentives

Different lenders and organisations may apply slightly different thresholds, depending on what they’re offering. This is why it’s important to answer questions accurately and follow the definition provided in each specific situation.

3. Insurance and risk assessment

This is one of the most practical and relevant times SME status comes into play for independent businesses.

When arranging business insurance, insurers will usually ask about:

Number of employees
Turnover
Business activities
Legal structure

These details help insurers understand how your business operates day to day. Based on this information, they can determine:

What type of cover is appropriate
How your level of risk is assessed
Whether a policy is suitable and valid for your business

Being clear and accurate about your business size and setup helps make sure you’re properly protected, without paying for cover you don’t need or risking gaps in protection.

4. Working with clients and suppliers

In some cases, businesses are asked to confirm their SME status when working with clients or suppliers.

This is especially common when dealing with larger organisations or public sector bodies, where SME classification may be part of:

Supplier onboarding checks
Risk and compliance processes
Their own internal or regulatory reporting

For most small businesses, this is simply a classification exercise rather than a judgement and being prepared can make the process quicker and easier.

How SME’s are offered support

Running a small business, especially on your own or with a small team, can sometimes feel like you’re expected to figure everything out as you go. The good news is that there’s a wide range of support available to SMEs, much of it designed specifically with independent and smaller businesses in mind.

For many business owners, a helpful starting point is guidance from the UK Government, which brings together information on funding, employment, tax, and day-to-day responsibilities in one place. From there, you can explore more tailored support depending on what stage your business is at.

Common types of SME support include:

Local and regional business hubs

Offering practical advice, training, and signposting to support in your area.

Chambers of Commerce and business networks

Providing networking opportunities, business guidance, and local insight.

Support organisations for small businesses

Such as membership bodies focused on the needs of sole traders and small companies, such as the Federation of Small Businesses.

Setting up an SME

For those who are just starting out, there is guidance available to help with the practical steps of setting up a business. This includes registering your business, understanding your tax responsibilities, and keeping basic financial records from the outset.

Support is also available when it comes to finance and loans. This can include business loans and government-backed finance schemes that are often aimed at SMEs, helping independent businesses access funding when they need it.

As your business develops, you may also reach a point where you’re ready to employ people. There is support available to help you understand employer responsibilities, including payroll, workplace pensions, and other obligations that come with taking on staff.

Overall, SME support in the UK reflects the fact that most businesses are small, independent, and service-based. Whether you’re just starting out or gradually growing, there are resources available to help you navigate each stage with more confidence and clarity.

Why SME status matters for insurance

Business insurance is usually built around a few core details, including the size of your business, the activities you carry out, and your level of risk exposure. Whether you work on your own or employ others also makes a difference. These factors help insurers understand what type of cover is appropriate and ensure your policy is set up correctly.

For many small businesses, this includes cover such as public liability insurance, which can help protect you if a third party is injured or their property is damaged, and employers’ liability insurance, which is a legal requirement if you employ staff.

As your business evolves; for example, if your turnover changes, you take on help, or your services expand your insurance needs can change too. Reviewing your cover from time to time can help make sure it still reflects how your business operates today.

Protect your SME with Business Insurance from Protectivity

Protectivity offers affordable business insurance suitable for self-employed, sole traders, limited companies and entrepreneurs, specialising in a wide range of different activities.

Public liability is included with options to add extras such as equipment cover, employers’ liability and other specific industry add-ons.

Explore the full list of business insurance we provide today – or get in touch with our team to discuss your specific requirements.

Sources:
https://www.business.gov.uk/
https://www.fsb.org.uk/media-centre/uk-small-business-statistics
https://www.gov.uk/government/publications/procurement-act-2023-short-guides/supplementary-information-small-and-medium-sized-enterprises-definition-html
https://www.gov.uk/government/publications/fcdo-small-to-medium-sized-enterprise-sme-action-plan/small-to-medium-sized-enterprise-sme-action-plan

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09:43:28 GMT • 20 January 2026

Self-Assessment Deadline 2026: When to get help with your tax return

15 January 2026

•

12 mins read

Contributors

My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...

If you’re self-employed, running an independent limited company, or earning income from property, self-assessment is one of those unavoidable parts of business life. For many people, it isn’t the work itself that’s difficult – it’s the paperwork, the rules, and the feeling that you’re expected to understand a system that was never properly explained. If that sounds familiar, you’re far from alone.

The reality is that self-assessment puts the responsibility on you to get things right, even if tax and admin aren’t your strengths. Every year, thousands of independent business owners face late filing penalties, unexpected tax bills, or cash-flow issues simply because they didn’t fully understand the process or left it until the last minute, not because they were careless or doing anything wrong.

In fact, HM Revenue & Customs (HMRC) reported in the first week of January 2026 that 5.65 million people were still yet to file their tax returns, with just four weeks left before the deadline. That number alone shows how common it is to feel behind, unsure, or overwhelmed by it all.

This guide explains self-assessment in straightforward terms, focusing on the areas people most often struggle with, when it makes sense to get help, and how to avoid costly mistakes ahead of the 2026 deadline, while also helping you plan more confidently for 2027 and beyond.

What is self-assessment?

Self-assessment is the system used by HM Revenue & Customs (HMRC) to collect Income Tax from individuals and businesses whose tax isn’t fully handled through PAYE. It’s most commonly used by self-employed people, landlords, and company directors who receive income in different ways throughout the year.

Rather than HMRC calculating everything automatically, self-assessment places the responsibility on you to manage your tax affairs. This means you must:

Report all relevant income accurately
Claim allowable expenses correctly
Submit your return and pay any tax owed on time

The tax year runs from 6^th April to 5^th April, and your self-assessment return covers all income earned during that period, even if the money is paid later.

For independent businesses and individuals, this typically includes trading income, rental income, dividends, and other taxable income that isn’t taxed at source. Understanding what needs to be included and how it should be reported, is a key part of avoiding mistakes later on.

Key self-assessment deadlines for 2026

Knowing your deadlines is critical and one of the most common areas people fall behind.

For the 2024/25 Tax Year (6 April 2024 – 5 April 2025)

Register for self-assessment: by 5^th October 2025 (passed)
Paper return deadline: 31^st October 2025 (passed)
Online return & tax payment deadline: 31^st January 2026

For the 2025/26 Tax Year (6 April 2025 – 5 April 2026)

For the 2026 tax year, income you make this year:

Register for self-assessment: by 5^th October 2026
Online return: by 31^st January 2027
Tax payment due: 31^st January 2028

Miss the January deadline and you’ll face:

An automatic £100 penalty
Daily penalties after 3 months
Interest on unpaid tax

Even if you owe no tax, penalties still apply.

How to register for self-assessment

If this is your first time, you must register with HMRC before you can file. Before you can start, you need a Unique Taxpayer Reference (UTR).

When to register

You’ll need to register by 5^th October following the end of the tax year you need to report. For example, for the tax year 2025-2026, you’ll need to register by 5^th October 2026.

HMRC will send you a Unique Taxpayer Reference (UTR) by post, this can take time, so don’t leave it until the last minute. You can also download the HMRC app, which provides easy access to check your details and obtain further information.

How to file your self-assessment return

Online filing

Most independent businesses file their self-assessment tax return online, either directly through HMRC or using approved accounting software. Online filing is usually the simplest option, with automatic calculations, built-in checks, and a later deadline than paper returns.

Before you can file, you’ll need a Unique Taxpayer Reference (UTR) from HMRC and a Government Gateway ID to access their online services.

If this is your first time filing, it’s worth allowing extra time for registration and setup, as these steps can’t always be completed instantly.

Paper Filing

From 6^th April 2026 (the next tax year) paper filing will no longer be possible. Everyone is expected to adopt the Making Tax Digital process, unless given an exemption directly from HMRC.

Find more about the Making Tax Digital system and deadline.

What information you’ll need to file

Preparation is where many people struggle and where mistakes creep in.

You’ll typically need:

Total business income
Rental income (if applicable)
Allowable expenses
PAYE income (if you also have a job)
Dividend income
Student loan details
Pension contributions

Good records make filing easier, reduce stress, and help avoid overpaying tax.

Who does self-assessment apply to?

Self-assessment applies to more people than many expect, plus you may have different criteria depending on your how you operate.

How your business is structured plays a big role in which taxes you pay, how you report income, and what deadlines apply. Below is a simple overview of how tax responsibilities typically differ across common business types, helping you quickly see what applies to your situation and what you may need to keep in mind as your business grows.

Below is a practical overview of the most common business types and how self-assessment typically applies to each.

Self-employed or a Sole trader

This includes sole traders, freelancers, contractors, and consultants.

If you’re self-employed, you’ll usually:

Pay Income Tax via self-assessment
Pay National Insurance contributions
Have a simpler structure, but personal liability for tax and debts

Freelancers and contractors often have additional complexity, such as:

Multiple income streams
Possible IR35 considerations when contracting

Anyone earning more than £1,000 from self-employment or a side hustle typically needs to register.

Small limited company director

If you’re a director of a limited company, your tax responsibilities are different, even if the company is small or not actively trading.

You may need to file self-assessment if you:

Take a salary and/or dividends
Receive benefits or other untaxed income

Limited companies themselves:

Pay Corporation Tax
Are a separate legal entity
Have additional reporting and filing obligations

This distinction often catches new directors out, especially when mixing personal and company income.

Landlords

Self-Assessment usually applies if you earn income from property, including:

Residential or commercial property
UK or overseas rental income
Jointly owned property (each owner files separately)

Property income has its own rules and allowable expenses, which can make returns more complex than expected.

Partnerships & other income sources

You may also need to complete a Self-Assessment tax return if you earn income alongside your main job or business, or if your income doesn’t fit neatly into a single category.

This commonly includes:

Shared profits through a partnership or joint venture
Side-hustle or second income, such as online selling, freelance work, or gig economy platforms
Other untaxed income, including foreign income, capital gains, or multiple income streams

Side-hustle income is a frequent source of confusion, particularly for people who already pay tax through PAYE. Even if your main job is taxed automatically, additional income over £1,000 in a tax year usually needs to be declared through Self-Assessment.

Where income comes from multiple sources, reporting becomes more detailed, and it’s easier to overlook something. In these situations, checking early, or seeking advice, can help ensure everything is declared correctly and reduce the risk of penalties later.

How to pay your self-assessment tax

Understanding when and how income tax is paid can make a big difference to cash flow, especially for sole traders and self-employed business owners. Rather than paying tax automatically through payroll, income tax is usually settled after you’ve submitted your Self-Assessment return, which can feel unfamiliar if you’re new to running a business.

This section breaks down the main types of income tax payments you might be asked to make, what they mean in practice, and why they sometimes come as a surprise.

Balancing payments

A balancing payment is the amount you owe for the previous tax year once your Self-Assessment return has been submitted and HMRC has calculated your final bill.

This payment is usually due by 31^st January and reflects any tax that hasn’t already been paid through PAYE or payments on account.

Payments on account

If your income tax bill is over £1,000, HMRC may ask you to make payments on account towards the next tax year’s bill. These are split into two instalments:

50% by 31^st January
50% by 31^st July

These advance payments are based on your previous year’s tax bill and are designed to spread the cost, but they can be unexpected, particularly in your first year of trading or after a profitable year.

Payment methods include:

Bank transfer
Debit card
Direct Debit
HMRC app

Late payments

If tax payments are made late, HMRC may apply:

Automatic penalties
Daily interest charges
Enforcement action if the debt is ignored

If you’re struggling to pay on time, contacting HMRC early can sometimes help, as support options may be available.

Common self-assessment mistakes

Most self-assessment mistakes aren’t caused by carelessness, they happen because deadlines are easy to miss, tax rules aren’t always clear, and many people are juggling this alongside running a business. Accountants see the same issues arise year after year, particularly among small businesses and first-time filers who are managing the process themselves.

The most common problems include:

Missing key deadlines, including registration, filing, or payment dates
Misunderstanding payments on account, leading to unexpectedly high tax bills
Errors in reporting, such as under-declaring income or claiming expenses incorrectly

While these mistakes might seem minor at first, their impact can be significant. Even small errors can trigger:

Automatic penalties and interest charges
HMRC enquiries or audits, which take time and energy to resolve
Cash-flow issues, especially if unexpected tax bills arrive at short notice

Spotting risks early, keeping clear records, and asking for help when something doesn’t make sense can prevent most of these issues before they escalate.

How to get help

Knowing when and how to get help can make a significant difference to a smooth process. Tax rules aren’t always intuitive, and as we’ve seen from common errors, small misunderstandings can lead to costly errors, missed reliefs, or unexpected bills.

Getting support is strongly recommended if you’re facing any uncertainty, particularly if:

You’re filing a self-assessment return for the first time, or your circumstances have recently changed
You’re unsure what counts as an allowable expense or how to report different types of income
Your tax bill is higher than expected, payments on account don’t make sense, or you’ve missed a deadline

Even a short conversation with an accountant or tax adviser can clarify your position, highlight potential savings, and help you avoid problems that can otherwise linger for years.

Ways to get support

There are several ways to access help, depending on how much guidance you need:

Official HMRC guidance and helplines, which can help explain deadlines, forms, and basic requirements
Accounting software with built-in support, often useful for straightforward returns and ongoing record-keeping
Professional accountants, bookkeepers, or tax advisers, particularly valuable for landlords, limited company directors, or anyone with multiple income streams

The key is choosing support that matches your situation. For some, a tutorial or software prompt is enough. For others, professional advice can quickly pay for itself by reducing risk and ensuring everything is done correctly.

Discover more on when to hire an accountant.

Plan early, avoid stress

While we’ve highlighted where things often go wrong, it’s worth remembering that millions of people successfully complete their self-assessment each year. With early planning, clear records, and seeking support when needed, most mistakes are completely avoidable.

If you’re self-employed, running a small, limited company, or earning rental income, taking time now to understand your obligations, prepare for key deadlines, and decide whether you need help can make the process far less stressful — and your future self (and bank balance) will thank you.

Get Business Insurance from Protectivity

https://www.gov.uk/government/news/565-million-still-to-file-as-the-self-assessment-deadline-looms
https://www.gov.uk/self-assessment-tax-returns/deadlines
https://www.gov.uk/self-assessment-tax-returns/registering
https://www.gov.uk/log-in-file-self-assessment-tax-return

Protecting your business beyond tax with business insurance

Knowing the self-assessment deadline is important to keep your finances in order, but it’s not the only thing business owners need to think about.

Unexpected events like client disputes, accidents, equipment damage, or other legal issues can all have a financial impact that isn’t covered by good bookkeeping alone.

Protectivity can offer a variety of business insurance policies, helping protect your income, your reputation, and your ability to keep trading if something goes wrong.

Sources:

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