Where can I get funding for my startup business?

You have a great idea for a product or service that’s going to bring some value into the world. But you know you need money to help get your startup idea off the ground. Where do you look and how does this work in practice?

In this post, we’ll see how your startup can get funded.

What do I need to supply to get startup funding?

Because your new business has no background or credit history of its own, it’s essential that you put together a solid business plan that sets out the problem your business is going to solve and how you’re going to do it.

Potential investors will want to know how much money you need, how you intend to use it and how you can give them a return on their investment. You’ll increase the chances of an investor opening their wallet to you by clearly expressing:

  • why the investor should invest in you, and
  • what the investor will get out of it.

As the saying goes, “people invest in people”. Even though your plans should include figures to show that your business case that stacks up, your potential investors also need to build trust in you and your team. Investors will want to hear your clear take on the problem your business solves and why you came up with your idea. You and the plan both need to be credible.

Investors need to feel confident that their investment is going to be repaid, so paint a picture of a sales/exit strategy that benefits everyone involved.

All of this may seem unfamiliar territory. After all, you might be trying to build an app, create a popup restaurant or imagine some other new product or service. Your skills lie in doing that thing, not in writing business plans or considering finance options and exit strategies.

Rather than muddling your way through in the hope of convincing an investor to part with their cash, it’s often wise to seek help when putting together the plans for your startup.

We’re used to talking with startups and positioning their new businesses in a way that appeals to potential investors. We can make introductions to relevant finance providers and industry contacts. Get in touch if you need a hand.

Before you look for investment

Aside from building a solid business plan, what else should you do to give your startup the best chance of receiving funding?

Our best advice is to do as much as possible by using your own personal funds. That might also involve borrowing from family and friends. It’s never easy to ask for money, but this is a more realistic early route than approaching a bank and expecting them to support a new business with no credit history.

Self-funding, including earnings from work you do in separate jobs, will show investors your commitment to your idea. After all, why should they take a chance on you unless you’ve shown the willingness to take a risk first?

Those early funds can also be crucial in helping you build a prototype of your idea. If you can create something to show to potential investors, that will be far more convincing than an idea on paper.

If your plan is to sell a physical product, could you get a model built? If it’s an app, could you make a video showing what it might do? If you’re creating a restaurant, could you develop a menu and some sample dishes?

There’s another important point to consider while you’re getting ready to pitch your idea to the world. The last thing you want is to share your plan before you’ve protected your intellectual property (IP) and investigated any relevant copyright issues.

Failing to do this means that your idea could be used without you getting any of the credit. Take the necessary steps to protect your startup before seeking investment or go to market.

Where can startups look for investment?

Let’s say you’ve developed your business plan and have put your own funds into getting some form of prototype ready.

Having reached the limits of what you can do by yourself, you now want to secure some funding to grow your startup business. Here are some routes to investigate.

Business Gateway

Business Gateway is known for offering courses on how to get started and improve your business.

It can act as a stepping stone to accessing funds to help your startup. Though you won’t receive any money directly from Business Gateway, you can make connections with relevant organisations who may be able to help with investment.

For example, promising new companies in Scotland may pass through Business Gateway and be referred to Scottish Enterprise, who in turn can help with access to government-backed grants.

Business Gateway can also advise you about research and development grants and other routes to access funds to support your startup.

European funding

Startups can benefit from loans of up to £25,000 via the Scottish Growth Scheme, a £500 million package of financial support for Scottish businesses from the Scottish Government and the European Regional Development Fund. This fund isn’t tied to the UK’s status as a member of the EU (in other words, it’s not affected by Brexit).

At MHA Henderson Loggie, we’ve successfully helped clients raise debt finance through Business Loans Scotland (https://www.bls.scot/), but these funds can also be accessed through:

  • DSL Business Finance Ltd
  • Business & Enterprise Scotland Ltd
  • Techstart Ventures
  • Foresight Group

As you might expect, accessing funds like this isn’t just a simple case of filling in a form, so it’s best to talk to a competent professional partner who can help. We make introductions like this for many of our startup clients, so get in touch if you’d like to discuss this further.

Debt funding of up to £100,000 is available for more established businesses, so these loans aren’t just for startups.

Business angels

Most of the business angel networks in Scotland will be registered with LINC, the Scottish Angel Capital Association, and details of their investment preferences and appetites can be found on the LINC website (https://lincscot.co.uk/). Look up the “business angels” who are interested in your field. They have their own websites that allow you to submit your plans.

Such submissions generally go to a gatekeeper who then filters the applications and proposes the most relevant and interesting plans at the angel investor meetings. Your plan needs to be attractive enough to survive the selection process and be offered up in front of the investors.  It can help to have talked to one or more of the angels directly in advance and have them champion your plan. Meetings might take place every few weeks or months, so you may need to be patient. In most cases, significant investments are unlikely to be arranged quickly.

Business introductions

Your accountants are likely to have their own network of high-net worth individuals. In our case, we often make introductions between our startup clients and our network of clients who have expressed an interest in making such investments.

To give our startup clients the best chance of securing the funding they need, we help them brush up their business plans to make them “investor ready” before passing them on to their potential future business partners.

Also, our network includes bankers, lawyers and other professional service providers, so we can often make introductions that help startups with the other tasks associated with doing business.

Does my UK location affect my potential for startup funding?

Your location usually isn’t relevant to whether you can secure funding for your startup.

However, when it comes to local authority-backed grants, the funding process can differ a little across the UK.

Regional Selective Assistance grants, for example, depend on your postcode. In areas with low employment, Scottish Enterprise may offer a grant based on your business employing staff. The extent of such a grant depends on the area you’re in and number of employees you take on.

Schemes like this are based on your business making a financial outlay and then recouping some of your costs – so you still need the funds to spend in the first instance.

How true is the Dragons’ Den version of startup funding?

The good news is that the reality of dealing with investors is less adversarial than what we see on TV. What works on an entertainment show doesn’t always reflect the truth of business.

If you meet with a potential investor, it’s safe to say that they’re already interested in working with you. The difficult part is getting them into the room to begin with.

So, the challenge is to get on their radar. Getting a startup funding deal over the line is more about good research and preparation than it is about a face-to-face battle of wits.

How are startup funds paid?

Even if you’ve made a winning case, remember that any investors in your startup will need a legal agreement before a penny is exchanged.

Your business plan should include details on what you’re offering to investors and this will form the basis of negotiations over the investment structure such as how many shares their money gets them and how many seats they’ll occupy on your board.

With this information clear, agreed and legally binding, your investors will deposit money into your business bank account. Remember that there should be no doubt about what the money will be used for and how long it’s expected to last.

Investors don’t want surprises. Do everything you can to uphold your side of the agreement.

Let’s sum up

Running a startup isn’t easy and neither is securing funding to help it grow.

Potential investors need convincing before they loosen their purse strings. Our best advice is to build a robust business plan that stands up to their close inspection.

Start small and do what you can with your own funds first, including creating a prototype of your product or service to build your credibility and help give investors confidence in your work.

Be clear on what problem you’re going to fix and let the investors buy into you as much as they do the business itself. Approach Business Gateway and look for business angels who can make referrals to the right groups, and keep in mind that some startups may be able to access government-backed grants.

Finally, speak with the people who can put your plans in order and give you the best chance of connecting with the investors who can help make your startup a success.

To chat with us about how we help connect our startup clients with potential investors, get in touch now.

Startup expenses: what you can and can’t claim

Money’s tight when you’re a startup. The last thing you want is to miss out on reclaiming expenses you incur as you start to build your business.

But while you’re busy assembling a team, working on developing your product or service, marketing your brand and doing all the other things that new business owners need to do worry about, it’s easy to forget about keeping an eye on the finances.

Looking for help online isn’t always easy either. There’s plenty of information spread around on gov.uk, but its guides run to more than 100 pages and finding and reading all that certainly can be … “taxing”.

So, what expenses can startup businesses claim? Here’s our roundup of the most common areas where you can (and can’t!) claim expenses for your startup.

If you’re in any doubt about what you can or can’t claim, speak to your accountant. Or set up a call with us and let’s talk about how we can support your startup business as it grows.

The golden rule for what you can claim as a business expense

Claim only for the expenses that you incur which are wholly, exclusively and necessary during the everyday running of your business.

Capturing all your costs is the key to not missing out. We often see startups not claiming for expenses that are perfectly legitimate. So, hold on to your receipts, because expense claims for the following are likely to be tax deductible.

Pre-setup costs

It’s easy to assume that you can claim for expenses only after you start your business. In fact, limited companies can claim relevant expenses for up to 7 years before the business begins operations.

Here are some areas where business expenses may be tax deductible:

  • computers & software
  • internet & web domain fees
  • travel costs
  • professional services

Laptops and tablets can be a grey area for expenses, because their portability means they’re often used at work and at home. If you’re confident that you can justify the expenditure based on a real business need, you should be fine to claim these.

Professional services can include the costs associated with accounting and legal help, such as company formation and the drafting of contracts.

There may be some items that count as business expenses but that are not allowable as tax deductions. Not all business expenses are tax deductible.

Try to maintain an accurate record of pre-formation and running costs, including VAT receipts. Doing so helps you justify your actions should your business expenses claims be queried.

Business insurance expenses

You can claim the cost of your business insurance policies as limited company expenses, so long as they’re used strictly for business purposes.

Allowable expenses for business insurances include:

  • public liability insurance
  • employers’ liability insurance
  • professional indemnity insurance
  • contents insurance
  • vehicle insurance (if you have company vehicles)

Advertising, marketing and PR expenses

Promoting your startup is an important part of building momentum for your new business. So, the following are claimable on your company expenses:

  • advertising (online, print & other media)
  • social media campaigns
  • PR

These expenses can be for one-off promotions or ongoing costs, so long as the investment relates solely to business purposes.

Travel and accommodation expenses

Travelling and overnight stays put a strain on your time as a business owner, but many of the related expenses can be reclaimed:

  • accommodation costs for business trips with overnight stays
  • reasonable food, drink and subsistence costs
  • business mileage costs

There is an HMRC-approved scheme for claiming mileage. Keeping a mileage log and using this scheme is a quick, easy way to reclaim travel costs. Keep in mind that you have to satisfy the following for your expenses to be valid:

  • You’re responsible for paying the travel costs.
  • The travel is necessary for work purposes and you need to be present at the destination in question for business purposes. (This doesn’t include the everyday commute between your home and permanent workplace.)

If you use your personal car or van to travel to a temporary place of work and you’ve paid for the fuel out of your own pocket, you can claim the following rates as limited company expenses:

  • car/van – 45p per mile for the first 10,000 miles and then 25p for every mile thereafter.
  • motorcycle – 24p per mile
  • bicycle – 20p per mile

Claiming the above rates doesn’t just lower your total Corporation Tax bill, it also means you can reimburse yourself for the amount claimed.

As well as the mileage rates listed above you can also claim the following as business expenses:

  • parking costs (but parking fines are not allowable)
  • road toll fees
  • congestion charges
  • hotel rooms (within reason)
  • food and drink on overnight trips
  • public transport, including train, bus, air and taxi fares
  • vehicle Insurance (company vehicles only)
  • vehicle repairs and servicing (company vehicles only)

Note that travel doesn’t have to mean long distances: trips to banks, solicitors and other short but necessary business travel can all be claimed. It may not seem like much, but it all adds up over the course of a year. 

Bank charges

Keeping your money safe and handling transactions are necessary parts of doing business. Therefore, bank fees charged to your business accounts can be claimed as valid business expenses. That also includes claims for credit card and loan interest.

Use of home as office

While most businesses run on their own or rented property, but it’s also possible to run a business from home.

If you do this, you’re able to claim a percentage of your household costs and utility bills as business expenses.

The easy approach is to claim a simple rate of £4 per week (£208 per year). Alternatively, you may wish to work out what rooms you use for your business needs and the amount of time they’re used for work purposes.

You’ll also be able to claim back other related costs related to working from home, so long as they’re incurred solely for the purposes of business:

  • lighting
  • heating
  • postage & printing

Gifts, entertainment and trivial benefits

Staff entertainment and staff gifts can be claimed as business expenses. However, there are limits to what can be allowed for tax purposes.

Cash gifts to staff, or gifts that are performance related (such as rewards), are taxable on the employee, whereas flowers for a staff member would be perfectly acceptable.

For staff events and parties, the costs of entertaining your employees can be claimed as a business expense if it’s an annual event open to all staff members and costing less than £150 per person.

Any client entertaining, even if it’s a genuine business expense, is not allowable for tax purposes.

Phone bills

Communication utilities, including phone and broadband access, can be claimed as a limited company expense.

If your mobile phone contract is in your company’s name and it relates solely to business purposes, you can claim the entire bill as a business expense.

If it’s a personal contract, you’ll need to separate the business and personal use and then claim for only the business-related expenses. You can also claim limited company expenses for the business calls you’ve made from your home phone line.

HMRC have looked closely at this issue in recent years. If your phone contract is used for both personal and business but you easily identify what the business costs are, you’re advised not to claim any of it.

Equipment expenses

Plant and equipment purchases can be claimed so long as they’re used mainly for business purposes. Examples include:

  • computers
  • company vehicles
  • furniture

These costs will likely be treated as capital expenditure and end up as assets on your Balance Sheet rather than your normal expenditure. You’ll get the tax deduction for them in your Corporation tax return, under HMRC’s Capital allowance rules.

Professional development expenses

Personal development and training courses can be claimed as limited company expenses. Any training has to be wholly and exclusively for the purposes of your trade. If in doubt, check eligibility before adding such expenses to your records. 

You’re also allowed to claim expenses for magazine subscriptions, journals and books.


If your startup is a limited company and you’re a director, it’s normal for you to pay yourself a salary as an employee of your business. That salary and the corresponding National Insurance Contributions (NIC) can be claimed as allowable expenses.

Once you reach the National Insurance threshold, you’ll have to start paying NIC.

Though it goes beyond the scope of this article, we’d encourage you to think about how you’re paying yourself. For example, some business owners take a minimal salary and then use dividends to help with their personal allowance.

Our team are used to talking people through what’s best for their personal tax circumstances. Get in touch if you’d like to explore this further with us.


Thoughts of pensions might be a long way off when you’re just getting rolling with a startup business.

But if you’re the type to think ahead, keep in mind that your limited company can pay into your pension scheme. 

As an employer contribution, this would be an allowable tax deduction from the company profits, therefore reducing the tax payable by the company.

There are limits on how much money the company can pay into your pension in any one tax year.

Common expenses that your startup business can’t claim for

Remember that you can claim only for the expenses that you incur which are wholly, exclusively and necessary during the everyday running of your business.

You can’t claim for expenses that have a dual purpose for business and personal use. For example, if you decide to extend a business trip abroad for leisure purposes, you can claim only for the business days.

As per the section about phone bills, you need to differentiate clearly between business and personal use in order to claim expenses on a personal mobile contract. That’s why it’s probably best to set up your contracts in your business name.

Here are some general examples of expenses that can’t be claimed for:

  • home to work journey
  • most client entertaining
  • business trips that you extend for personal holiday
  • anything for personal use

In practice, that hasn’t stopped some of our clients trying to claim for expenses that were never going to make it through.

Here are some real examples that again can’t be claimed for:

  • trips abroad being claimed as annual AGM costs for their spouse’s company
  • family meals out being claimed as shareholder meetings
  • sports season tickets being claimed as “sponsorship”
  • kids’ bikes being claimed through the cycle to work scheme
  • petrol receipts being claimed through the business, when the company owns only a diesel vehicle
  • multiple iPhones/iPads going through the business around December time, despite there being only one director/employee in the company
  • games consoles described as computers in the client’s cashbooks

Remember to stick with what’s reasonable: only genuine business expenses count.

If you’re in doubt about what’s a reasonable expense, do check with your accountant. And if there’s a grey area, you might be safest not to claim.

Business expenses may be paid through your company’s bank account, or you can reclaim the costs of business expenses paid by you and later reimbursed via your company.

In summary

As you can see from the lists above, there’s a vast array of things that startup businesses can claim for as well as a few things that definitely can’t be claimed for! Most business owners can easily overlook one or more of these areas, so keep this article handy and make sure you’re always holding on to your receipts for your expenditures.

And again, if your expenditure is for something wholly, exclusively and necessary during the everyday running of your business, you can probably claim for it as a business expense.

If you’d like to find out more about how we can help you get your tax right and not miss any of the expenses your startup business can claim, contact us now.

Should you hire an accountant? Pros & cons for startups

You’d expect an accountancy firm to be biased on the question of whether or not startups and other businesses should hire an accountant. But is getting an accountant always the right move? Perhaps not.

In this post, we take a fair look at the advantages and disadvantages of using an accountant to support your startup business.

Pro: Peace of mind

Finance is not every businessperson’s strong point. When you have many other tasks vying for your attention, this isn’t an area where you want to make a mistake.

Knowing that a professional organisation will keep your finances in good order is a great basis for turning your startup into a stable business.

Pro: Lower costs than expected

Many of the businesses we deal with find that the money they spend hiring us is paid for by the savings we’re able to help them make.

Our fees depend on the level of work involved. One good way for you to cut your expenditure on accountancy is to do some of the necessary tasks yourself. For example, many of our clients use cloud packages such as Xero, QuickBooks and Sage, which means there’s less admin for us and hence a lower charge.

If hiring an accountancy firm represents little or no cost to your business, the smart thing to do is to leave the numbers to the experts and get on with running your core operation.

Don’t forget that costs can be measured in time as well as in pounds and pence. We regularly save our clients hours of effort each month. Imagine what you could do with that spare time to help push your startup forward.

Pro: Claiming for the right things

Working with a professional accountant will help you avoid problems we’ve seen with lots of new clients. That includes issues such as not having registered for VAT soon enough or buying a car in an individual’s name and then trying to claim it as a company vehicle.

In addition, there are many things your business might be able to claim for but that you’re not aware of. Simply put, you don’t always know what you don’t know.

The good news is that it’s an accountant’s job to know this sort of thing. That’s why hiring professional help can often save your business money instead of being a cost.

You can learn more about the types of expenses you can (and can’t!) claim for by reading our article here.

Pro: Improved business processes

Working with an accountant shouldn’t mean having to record any more or less data about your business. Good record-keeping is essential and you should be doing this anyway.

However, we’ve found that many of our clients have changed and improved their processes based on our feedback. For example, we’ve shown them a better way of handling their year-end processes, and that sort of adjustment will benefit them for years to come, whether they keep working with us or not.

Your accountant may be able to assist you with book-keeping and cash flow projections. They can assess the likelihood of getting bank loans approved, and they can even make introductions to other businesses, such as solicitors, thanks to their network of connections.

Activities such as this are part of our standard approach to helping our clients. Instead of just being the number crunchers, we try to provide something of greater value so that startup businesses have the best chance of sticking around.

Pro: Privacy protection

All our processes are GDPR compliant, as are the cloud-based packages our clients use, including Xero, QuickBooks and Sage.

Data protection is an essential cornerstone of working with a professional accountancy firm. In contrast, handling financial tasks internally might not give you such protections.

Think about how well set up you are to explain how your financial processes work if ever your business were to be inspected by HMRC.

Con: Another burden on your funds

We know that money is top of mind in most businesses, especially in startups, where you have to stretch every penny while you work hard to build momentum.

If anyone in your business has financial skills and experience, they might be able to fulfil the role played by an external accountancy firm. Even if this isn’t a permanent role, leaning on in-house expertise in the short term could be a good way of saving much-needed funds until you’re ready to outsource this work to dedicated professionals.

In our experience, clients tend to hire accountancy firms like ours only at the point where it’s a necessity. That’s understandable: just make sure to keep good records so that it’s easy for you to work with an accountant when that time comes.

Con: Underuse of in-house skills

You might already employ someone with all the skills necessary to do the accountancy work in-house. If that person is already occupying another role, it might be possible to get them to handle their regular tasks and accountancy tasks as part of their normal working week. This has the potential to save the business a lot of money, so long as the person in question keeps their knowledge up to date.

Using an in-house person also means you avoid needing to carry out due diligence on hiring an accountancy firm. Assessing the relevant costs, services, locations and qualifications all take time. Bear in mind, too, that anyone can call themselves an accountant or tax adviser even though they might not be accredited via ICAS/ACCA/ICAW (we have these accreditations!).

Con: Hire your own member of staff

For some businesses, it’s important that every aspect of the work is done internally, and that means that even accountancy wouldn’t be outsourced.

If your corporate culture and ethos is built along these lines, you’ll need to hire people capable of handling your accounts. This comes with its costs, especially if those people have a dedicated accountancy-only role in your organisation.

This approach does not exclude you from potential inspection and auditing from the relevant tax authorities.

Con: Alternative routes may be better early on

Paying for an accountant isn’t the only way to get your accounts in order. You might be better served, at least early on, by learning the financial skills necessary through Business Gateway, through Elevator or through mentoring arrangements with experienced business-people.

Let’s sum up

We think that smart startups are best off working with an accountant as soon as they can. But as our list shows, there are reasons for and against doing so.

Think about what’s right for your new business, and if you need a hand with your accounts or simply want to chat, please get in touch with Mark Hay, Audit & Accountancy Manager (mark.hay@hlca.co.uk | 01224 322100) or fill out the form below and we’ll get back in touch with you soon.

Andy Niblock

Andy provides audit and accountancy services to clients in both the commercial and charitable sectors. He trained and worked for a Big 4 firm, and also worked in industry for a period before returning to the profession.

Andy has very much a hands-on approach due to his time spent in industry, and understands the practical issues of running a finance function and the issues they are faced with.

Andy also specialises in outsourcing of finance functions, providing this service to companies without their own in house finance team. The service Andy provides means he’s often involved with companies on a day to day basis, providing advice and ensuring their time is freed up rather than worrying about the financial administration side of their business.

Angela Whyte

Angela provides audit services to commercial clients, ranging from small to large corporates, across an assortment of sectors including publishing, retail and construction.

She also manages a portfolio of Further Education Colleges across Scotland, providing external audit services, as well as managing a range of accounting and management accounts assignments.

Angela trained and qualified with MHA Henderson Loggie.

David Smith

David Smith is the Managing Partner of Henderson Loggie. As the firm’s business leader, David works closely with his fellow Partners and staff, supporting their delivery of services to meet clients’ needs across a range of sectors.

Driving growth and facilitating the implementation of the firm’s development strategy is a key role as Managing Partner, but David has also established a reputation as a respected advisor in the Professional Practice and the Healthcare sectors, amongst others.

David helps clients develop their businesses through Business Improvement Services, specifically strategic planning, sustainable competitive advantage, family business issues, leadership development, personal development, and lean management.

David also specialises in Corporate Finance, specifically investor readiness, business planning, financial modelling, fundraising, assistance with grant claims, company valuation, buying and selling businesses.

In addition, David is a Non-Executive Director for J&D Wilkie Limited, a privately owned global textile manufacturing company, and Henderson Loggie Financial Services Limited.

Fiona Morgan

Fiona works with a variety of owner managed businesses and charities, both large and small, advising them on accounting, taxation and business improvement. Fiona is also responsible for the provision of the audit service within Aberdeen office.

Fiona’s clients operate in numerous sectors including food & drink, tourism, manufacturing, oil & gas service, professional services, retail, property development and recruitment. Working with them from inception through all the crucial phases in the development of a business, she has a personal approach which ensures that she can provide advice and re-assurance when it’s most needed.

Using her experience with Mindshop International, Fiona helps clients develop their businesses through business improvement services, specifically strategic planning, sustainable competitive advantage, family business issues, leadership development, personal development, and lean management..

George Hay

George is an experienced auditor and business adviser having worked in a wide variety of sectors and roles throughout his career. George’s focus is on the Agriculture & Rural Business and Charities sectors while continuing to act in a business advisory capacity for his long-standing commercial clients.

George likes nothing more than working tirelessly with his clients to assist them meeting their objectives and co-ordinating the firm’s specialist services to achieve this whether that be in the area of organic growth, acquisitions, disposals or effective tax planning.

George is also an accredited mediator.

Ian Cameron

Ian has over 20 years’ experience as a Partner in Henderson Loggie dealing with a varied portfolio of clients, both large and small, helping them with all their financial requirements. He provides general business advice and accounts preparation, as well as both personal and corporate tax.

Ian acted as local secretary for ACCA and was also as part of the Scottish Executive Committee for ACCA where he acted as the National Technical Liaison Officer.

Ian is Head of the firm’s Motor Retail Sector Group.

Mark Hay

Mark is a Manager in the Accounting & Business Solutions department, working with small and medium sized owner managed businesses, operating in a number of sectors such as food & drink, oil & gas service industry, manufacturing, property development, professional services, and retail.

Mark oversees the provision of various services to our clients including the preparation of statutory and management accounts, VAT returns and corporation tax returns. He is also responsible for other assignments including; incorporations, business planning and the preparation of cash flow projections.

Mark has experience in a variety of different accounting software packages including SAGE, KashFlow and FreeAgent.