How to Start a Business in the UK: A Practical Step‑by‑Step Guide
Thinking about starting a business? You’re not alone. For many people, the new year (or a major life change) is the moment they finally decide to turn a skill, side hustle or idea into a real company.
The challenge is rarely the idea itself. The real head‑scratcher is: where do I actually start?
Whether you’re planning a trades business, a café, a consultancy or a wellness studio, the steps to get set up properly are broadly the same. This guide walks you through the key stages, in plain English:
Choosing your business structure
Writing a simple, useful business plan
Understanding regulations, certifications and insurance
Getting your branding and marketing foundations in place
Opening a business bank account
Registering with HMRC (and, if relevant, Companies House)
Exploring funding options
Preparing a clear, confident pitch
You can read it straight through or dip into the sections most relevant to you.
1. Choose the Right Structure: Sole Trader, Limited Company or Partnership?
Before you design logos or print business cards, you need to decide how your business will legally exist.
In the UK, the three most common structures for small businesses are:
Sole trader
Limited company
Partnership
Sole trader
As a sole trader, you and the business are legally the same person. That means:
You keep all the profits after tax
You’re personally responsible for any debts the business runs up
You report your business income on your Self Assessment tax return
Why people choose it:
Very quick and simple to set up
Minimal reporting and admin compared to a limited company
Easy to stop or pause if your plans change
This is often a good starting point for freelancers, tradespeople and small side hustles – especially when you’re testing an idea.
Limited company
A limited company is a separate legal entity from you as an individual. The company can own assets, enter contracts and owe money in its own name.
Key features:
Directors run the company; shareholders own it (you can be both)
Your personal liability is usually limited to what you put into the business
You’ll normally pay Corporation Tax on company profits, and then tax on what you take out (salary/dividends)
Why people choose it:
Often more tax‑efficient once profits reach a certain level
Looks more established and professional to larger clients and lenders
Easier to bring in co‑owners, investors or to eventually sell the business
The trade‑off is more admin and legal responsibilities: annual accounts, Confirmation Statements, statutory records and stricter deadlines.
Partnership
A partnership is like being a group of sole traders who agree to run a business together and share the profits.
Each partner pays tax on their share of the profits
Responsibility (including for debts) is shared between partners
A written partnership agreement is strongly recommended
Partnerships can be more flexible than a limited liability partnership (LLP) and simpler to set up than a limited company, but partners are still personally liable, so it’s important to choose carefully who you go into business with.
2. Write a Business Plan (That You’ll Actually Use)
A business plan doesn’t need to be a 40‑page document gathering dust in a drawer. At its best, it’s:
A thinking tool to refine your idea
A communication tool for lenders, investors and partners
Start by asking: who is this plan for?
If it’s mainly for you, focus on clarity, numbers and next steps
If it’s for investors or lenders, they’ll want to see:
How the business will make money
When it’s likely to break even and become profitable
What return they might get and in what timeframe
At a minimum, cover:
What problem you solve and for whom
Your market – who your customers are, how big the opportunity is, and who your competitors are
How you’ll reach customers – marketing, sales channels, pricing
Numbers – basic forecasts for sales, costs, cash flow and profit
Risks and “what ifs” – a few key risks and how you’d handle them
Once you’ve drafted it, get feedback. Friends and family are helpful, but try to also show it to someone with business or finance experience who can spot gaps and challenge your assumptions.
3. Regulations, Certifications and Insurance
What you must do legally depends a lot on what kind of business you’re starting.
A few examples:
Food businesses (cafés, caterers, food trucks)
Registration with your local authority
Food hygiene training (Level 2 Food Hygiene is often the standard)
Compliance with food labelling and safety rules
Fitness and wellness (personal trainers, yoga instructors, massage therapists)
Professional qualifications and memberships where relevant
Public liability and professional indemnity insurance
Insurance often required before you can rent studio space
Trades (electricians, gas fitters, builders)
Sector‑specific registrations (e.g. Gas Safe)
Health and safety obligations
The right mix of liability, tools and contract works insurance
Insurance isn’t just a tick‑box exercise; it’s about protecting you, your clients and your business if something goes wrong. Common policies include:
Public liability
Professional indemnity
Employers’ liability (if you hire staff)
Contents, stock and equipment cover
If you’re unsure what you need, this is exactly the sort of area J‑Benn Finance can help you think through alongside your accountant and legal obligations.
4. Get Your Branding and Marketing Basics Right
Branding isn’t just a logo – it’s how people recognise, remember and feel about your business.
Start simple:
Name: easy to say, spell and remember. Check that:
It’s not already in use by another business in your sector
The domain name (ideally .co.uk and .com) is available
Visual identity:
A clean logo that works in colour and black‑and‑white
2–3 brand colours and 1–2 fonts you use consistently
Message:
One clear sentence that explains what you do and for whom
A short tagline or strapline if useful
Then move on to marketing foundations:
A simple, clear website (even a one‑page site is better than nothing)
A Google Business Profile if you serve local customers
1–2 social platforms where your audience actually spends time (you don’t need to be everywhere)
The goal at this stage isn’t to become a marketing guru – it’s to make it easy for the right people to find you, trust you and contact you.
5. Open a Business Bank Account
If you’re a limited company, a separate business bank account is effectively essential: the company’s money must be kept separate from your personal funds.
If you’re a sole trader, it’s not legally required, but it’s still highly recommended because:
It looks more professional to clients and suppliers
It makes bookkeeping and tax returns far simpler
You’re less likely to miss expenses or mix up personal and business spending
Many banks and online providers offer:
Free or discounted introductory periods
Useful extras like invoicing tools and integrations with cloud accounting
If you’re not sure which type of account suits you best, factor in fees, integrations with software like Xero, and how you prefer to bank (branch vs app‑only).
6. Register Your Business and Choose a Company Name
You must tell HMRC about your new business so they know to expect tax returns from you.
Sole traders
Register for Self Assessment with HMRC
Keep good records of income and expenses throughout the year
Limited companies
Register (incorporate) the company with Companies House
Register the company for Corporation Tax
Make sure you understand your filing and record‑keeping duties as a director
When choosing a company name:
Check it’s not already taken or too similar to an existing name
Avoid anything offensive or misleading
Check domain names and social media handles while you’re at it
Aim for something you’ll be happy saying out loud every day
There are also new and upcoming identity verification requirements for company directors and people with significant control, so it’s worth getting familiar with those early.
7. Explore Funding Options
Not every business needs outside finance, but many do – especially if you need equipment, stock or premises.
Here are common routes UK start‑ups explore:
Friends and family
Often the first place people turn.
Pros: flexible, quick decisions, often lower or no interest
Cons: can strain relationships if expectations aren’t clear
Always put agreements in writing – repayment terms, interest (if any) and what happens if things take longer than planned.
Bank finance
Traditional bank loans and overdrafts are still an option, but:
You’ll usually need a solid business plan
They may want security (e.g. against property or other assets)
Start‑ups with limited collateral can find this route challenging
Grants and local schemes
Depending on your sector and location, you may find:
Local authority or regional growth grants
Sector‑specific grants (e.g. for innovation, green tech, training)
Grants rarely cover everything, but they can help nudge a project over the line.
Credit cards
Some founders use personal or business credit cards for early expenses.
Pros: fast, flexible, useful for small items and short‑term cash flow
Cons: high interest rates, easy to let the balance creep up
If you use credit cards, treat them like a short‑term bridge, not a long‑term funding solution.
Charities and start‑up support organisations
There are charitable and non‑profit organisations that offer:
Small loans and grants for people who are unemployed, young or under‑represented in business
Mentoring and training alongside funding
These schemes can be a great option if you’re starting from a difficult position and need support beyond just money.
Angel investors
Business angels are individuals who invest their own money into early‑stage companies in exchange for equity.
Typically invest anywhere from a few thousand up to low six‑figures
Often take 10–30% of the business, depending on the deal
May bring valuable expertise and contacts as well as cash
This route suits businesses with strong growth potential, not lifestyle businesses that are meant to stay small and steady.
If you’re weighing up funding options, it’s worth running the numbers with an accountant so you understand the long‑term impact on cash flow, control and tax.
8. Prepare Your Pitch
If you’re asking anyone else for money – from a friend to a bank to a business angel – you’ll need to sell your idea clearly and confidently.
Two things matter most:
A sharp written summary
One or two pages that explain:
What the business does
Who it’s for
How it makes money
How much you’re asking for and what it will be used for
How and when investors or lenders are likely to get their money back
A short, spoken “elevator pitch”
60–90 seconds that clearly covers:
The problem
Your solution
Why you/your team are the right people
What you’re asking for
Keep it plain English. Investors are backing you as much as the idea, so practice until you can explain it calmly and confidently without jargon.
Next Steps: Get Your Foundations Right
Starting a business is exciting – but it’s also a serious legal and financial step. Getting the basics right early on will save you time, stress and money later.
At J‑Benn Finance, we help UK business owners:
Choose the right structure for their goals
Set up compliant, tax‑efficient systems from day one
Understand their numbers so they can make confident decisions
If you’re thinking about starting a business and want a friendly, straight‑talking guide through the finance side, we’d be happy to help.
