How to Start a Business in the UK: A Step-by-Step Guide

Starting a business in the UK is more straightforward than most people expect, but the order you do things in matters. This guide takes you from first idea to first customer in 10 clear steps, with links to the detailed guides and free tools for each one. If you only read one page before you begin, make it this one.

This guide is general information, not legal or tax advice. Fees, thresholds and rules change, so check the linked GOV.UK pages for the current position and speak to an accountant if you are unsure.

The 10 steps at a glance

Check the idea is worth pursuing
Research your market and customers
Write a simple plan and work out your costs
Choose your business structure
Pick a name and secure your online presence
Register your business
Sort your address, phone and bank account
Check licences, permits and insurance
Set up your money and admin basics
Price, launch and win your first customers

Not sure you are ready yet? Start with am I ready to start a business? and come back when you are.

Step 1: Check the idea is worth pursuing

Before you spend money, test whether anyone will pay for what you plan to offer. A good idea solves a clear problem for a specific type of customer, and you can explain it in a sentence.

If you are still choosing, browse realistic UK business ideas worth testing. If you want to try something on the side first, our guide to starting a business from home covers the practical and legal basics.

Step 2: Research your market and customers

Talk to potential customers before you build anything. A few honest conversations can save you months.

Define who you are selling to with an ideal customer profile.
Work out why they would choose you with a clear value proposition.
Learn how to identify and analyse your competitors.
Follow our guide to market research for small businesses for low-cost ways to get real answers.

Step 3: Write a simple plan and work out your costs

A business plan does not need to be long. It needs to show what you sell, who buys it, how you will reach them and how the numbers work.

Learn how to write a business plan, see a sample business plan, or use the business plan builder.
Use the startup cost calculator to estimate what you need to get going, and the startup budget planner to plan your first months.
Decide how you will fund the start-up. If you need money from outside, see small business funding.

Be realistic about the early months. Most new businesses make less than expected at first, so build in a cushion.

Step 4: Choose your business structure

Your legal structure affects your tax, your paperwork and your personal risk, so it is worth deciding deliberately.

Sole trader. The simplest option. You and the business are legally the same, you register with HMRC for Self Assessment and you are personally responsible for debts.

Limited company. A separate legal entity. It offers limited liability, subject to responsibilities and exceptions, and comes with more admin and public filing duties. Tax efficiency depends on your circumstances.

Partnership. Two or more people sharing the business, with each partner personally liable. Take advice and put a written partnership agreement in place.

Read sole trader vs limited company to compare them side by side. You can start as a sole trader and become a limited company later if it makes sense.

Step 5: Pick a name and secure your online presence

Your name needs to be memorable, available and legally usable.

If you are forming a limited company, check the name is not already on the Companies House register, and avoid names that are too similar to existing ones or contain restricted words.
Search the UK trade mark register to avoid infringing someone else’s brand.
Check that a matching domain is available. Our guide to choosing a business domain name explains what to look for.
Plan how your brand will look and sound with our small business branding guide.

Secure the domain and social handles early, even if you are not ready to launch.

Step 6: Register your business

As a sole trader, register with HMRC for Self Assessment. If registration is required, the usual notification deadline is 5 October after the relevant tax year. Check the trading allowance and other registration conditions before deciding.

As a limited company, register with Companies House, then tell HMRC for Corporation Tax. Online registration is usually quick, and there is a government fee, so check the current amount. Our guide to registering a limited company walks you through each stage.

If you are VAT-registered or hiring staff, there are further registrations. Our UK small business compliance guide lists them all.

Step 7: Sort your address, phone and bank account

Business address. Limited companies need a registered office address in the UK that appears on the public register. If you do not want your home address published, see our guide to business addresses in the UK.

Business phone number. A dedicated number keeps work and personal life apart and looks more professional. Compare your options in our business phone number guide.

Business bank account. A limited company must keep its money separate from yours. Sole traders are not legally required to, but a separate account makes bookkeeping and tax far easier. Read our business bank account guide before you choose.

Step 8: Check licences, permits and insurance

Licences and permits. Some businesses need permission before they can trade, such as those serving food, selling alcohol or trading on the street. Food businesses, for example, generally have to register with their local council before opening. Use the business licence finder to see what might apply to you.

Insurance. Which cover you need depends on your work. If you employ anyone, employers’ liability insurance is a legal requirement in most cases. Public liability, professional indemnity and product liability are common for other businesses. See our business insurance guide.

Step 9: Set up your money and admin basics

Good habits from day one save you hours later.

Record every sale and expense as it happens. Choose a record-keeping system that meets your obligations, including compatible software where Making Tax Digital applies.
Put money aside for tax as you earn it.
Set up a way to take payments that suits your customers. See how to accept payments as a UK small business.
Keep your documents organised from the beginning, using our free business templates to get started quickly.

Step 10: Price, launch and win your first customers

Price with confidence. Many new businesses undercharge. Work out your costs, your time and your target profit, then follow our guide to pricing your services in the UK.

Get ready to invoice. Have a professional invoice template ready before your first sale, so you can get paid promptly.

Find your first customers. Start with people you can reach quickly: your network, local groups, past colleagues and online communities. Ask for referrals and reviews as soon as you deliver your first jobs.

Launch small and learn fast. A simple website, a clear offer and a handful of real customers will teach you more than months of preparation.

Your start-up checklist

Idea tested with real potential customers
Customer profile and value proposition written down
Simple plan and start-up budget complete
Business structure chosen
Name checked, domain and social handles secured
Registered with HMRC and, if needed, Companies House
Business address, phone number and bank account in place
Licences, permits and insurance checked
Bookkeeping, tax pot and payment method set up
Prices set and invoice template ready
First customers contacted

Want a longer version to work through? Our starting a business checklist goes into more detail.

Five common mistakes new business owners make

Skipping customer research and building something nobody asked for.
Underpricing to win work, then struggling to cover costs.
Mixing personal and business money, which makes tax time painful.
Registering late for Self Assessment or forgetting other registrations.
Ignoring admin until a deadline forces the issue.

Frequently asked questions

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

It depends on the type of business. Some service businesses can start for very little, while shops, food businesses and manufacturers cost much more. Use the startup cost calculator to build an estimate for your situation.

Do I need to register my business straight away?

Sole traders who need to register must normally notify HMRC by 5 October after the relevant tax year; check the trading allowance and other registration conditions. Limited companies are registered at the start. Registering early avoids last-minute problems.

Should I be a sole trader or a limited company?

There is no single right answer. Sole trader is simpler and cheaper to run. A limited company gives limited liability and can suit higher profits. Compare them in our sole trader vs limited company guide.

Can I start a business while I still have a job?

Often yes, but check your employment contract for restrictions on outside work and conflicts of interest. Check whether the income must be reported to HMRC and keep records from the start.

Do I need a business plan?

You do not legally need one, but it helps you think clearly and is essential if you want funding. Even a one-page plan is worth writing.

What licences might I need?

That depends on what you do and where. Use our business licence finder as a starting point and confirm with your local council.

More guides for the next step

Do I Need to Register as Self-Employed in the UK?Check whether your activity is a trade and whether you need to register for Self Assessment. Starting a small side business does not mean the paperwork can be ignored.How Much Does It Cost to Set Up a Limited Company?The incorporation fee is one cost. Your launch budget also needs to cover the practical work required to run the company and deliver its first sale.How to Choose a Business Name UK: Practical ChecksChoose a name that customers can understand, remember and find. Check the legal position before you order signs or pay for a website.

Official sources

Legal and financial details checked against official guidance on 15 October 2026. Use the current guidance for your circumstances.

Keep the business connected

Explore Polar’s business tools and software, free templates and current plans.