Accounting services
Accountant for starting a motor trade business
Motor Trade Accounting helps people across the UK set up new garages, car sales businesses and other motor trade ventures on the right footing. Get the structure, registrations and records sorted before the first vehicle is bought or the first job is booked.
Getting the foundations right
Starting out in the motor trade means making a lot of decisions quickly. You may be leaving a job as a technician to open your own workshop, turning a sideline in car sales into a proper business, or setting up as a mobile mechanic. Alongside finding premises, tools and customers, there are choices about how the business is structured and a list of registrations that each come with their own rules.
The first big decision is usually structure. Trading as a sole trader is simple to start and means registering with HMRC for self assessment, but you are personally responsible for the business's debts. A limited company is registered with Companies House, keeps the business separate from you and can offer more flexibility on how profits are taken, but it brings more administration, including annual accounts, a confirmation statement and identity verification for directors. Partnerships sit somewhere in between. The right answer depends on your expected profits, the risks of your trade and your plans.
Then come the motor-specific steps. Dealers may want trade plates from the DVLA, every motor business needs the right motor trade insurance, and anyone arranging finance for customers must be authorised by the FCA or act as an appointed representative of a firm that is. VAT registration, payroll for your first employee and digital record keeping all follow. A specialist motor trade accountant helps you work through these in the right order and set up records that will stand up from the first day.
Help with starting your motor business
Support covers the decisions and set-up tasks that new motor trade businesses face.
- Choosing a business structureComparing sole trader, partnership and limited company for your circumstances, including tax, risk and paperwork.
- HMRC and Companies House registrationsRegistering for self assessment or setting up a company, plus registering for PAYE and corporation tax where needed.
- VAT registration decisionsWorking out when you must register, whether registering voluntarily makes sense and which VAT schemes, such as the margin scheme, will apply.
- Setting up bookkeeping and softwareChoosing accounting software that meets Making Tax Digital rules and links to your workshop or dealer system.
- Stock and margin scheme recordsSetting up a stock book and invoice templates for used vehicle sales from the very first car.
- Funding and cash planningA first-year cashflow forecast to support conversations with banks, stocking finance providers or investors.
- Taking money out of the businessPlanning how you will pay yourself, whether through drawings, salary or dividends, in a tax-efficient way.
What to plan before you start trading
These are the things most worth thinking through before you open the doors.
Licences and authorisations
Check what your trade needs: trade plates from the DVLA if you move unregistered or untaxed vehicles, FCA authorisation if you will broker finance and any local permissions for your premises.
Insurance
Motor trade insurance can cover road risks, customer vehicles in your care and your premises and tools. Public and employers' liability may also be needed. Compare policies carefully.
Consumer law
If you sell used vehicles to the public, the Consumer Rights Act 2015 gives buyers rights where a vehicle is not of satisfactory quality, fit for purpose or as described. Factor that into pricing and preparation.
Workshop and environmental duties
Workshops produce waste oil, batteries, tyres and other materials that must be stored and disposed of properly. Check the rules that apply to your site with the relevant environmental regulator.
Good to know when starting out
The VAT threshold is based on turnover
You must register for VAT if your taxable turnover goes over HMRC's threshold, which looks at sales rather than profit. Check the current figure on GOV.UK, as dealers can reach it quickly.
Directors must verify their identity
Companies House now requires directors and people with significant control to verify their identity, so build this into your company set-up.
Startup costs may be claimable
Some costs incurred before you start trading can be treated as business expenses once you begin. Keep receipts for everything from the start.
Keep business and personal money apart
A separate business bank account from day one makes bookkeeping easier and is essential for a limited company.
How it works
- 1
Tell us your plans
Use the enquiry form to explain what kind of motor business you are starting and where you are up to.
- 2
Talk it through
A specialist motor trade accountant discusses your plans, your options for structure and what needs registering.
- 3
Set things up
Registrations, software and records are put in place in a sensible order, with a checklist so nothing is missed.
- 4
Support as you grow
Ongoing help with bookkeeping, VAT, payroll and year-end accounts as the business finds its feet.
Questions about starting a motor trade business
Should I be a sole trader or a limited company?
It depends on your expected profits, the risks you carry and your plans. Many start as sole traders and incorporate later, but a high-value car sales business may suit a company from the start.
Do I need trade plates?
Trade plates from the DVLA let motor traders move vehicles that are unregistered or untaxed on the road for specific business purposes. Not every motor business needs them, so check the DVLA's rules.
Do I need FCA authorisation to sell cars on finance?
If you introduce customers to finance or arrange it, you generally need to be authorised by the FCA or be an appointed representative of an authorised firm.
When do I need to register for VAT?
When your taxable turnover in a rolling twelve-month period goes over HMRC's threshold, or is expected to. You can also register voluntarily before then.
Can I use the VAT Margin Scheme from the start?
Yes, if you are VAT registered and buy used vehicles without VAT being charged, provided you keep the records the scheme requires.
Who will help me get set up?
Your enquiry goes to a qualified accountant who works with motor trade businesses and has helped new garages and dealers get started.
Start your motor business the right way
Tell us what you are planning and a specialist motor trade accountant will be in touch to help you get set up.