How to start a business in the UK: step by step checklist

Your checklist to start a business

Here's the whole process on one page. You don't have to do it all in a week. Most people work through it over a month or two, often alongside a job.

• Test the idea: talk to potential customers and get at least one to pay.
• Choose a structure: sole trader or limited company.
• Register: Self Assessment with HMRC as a sole trader, or Companies House and then Corporation Tax for a company.
• Check your business name follows the rules and doesn't clash with a trade mark.
• Open a separate bank account for business money.
• Set up simple records of what you earn and spend, and keep your receipts.
• Check what insurance you need, and whether your activity needs a licence or permission.
• Check whether you need to pay the ICO data protection fee.
• Put your tax deadlines in your diary: 5 October, 31 January and 31 July.
• Find your first customers and ask each one for feedback.

Test your business idea before you register anything

You don't need to register a company to find out whether people will pay you. Before spending money on a logo, a website or stock, talk to the people you want to sell to. Ask about the problem you'd solve for them, what they do about it now and what they pay for it.

Then make a small, real offer. A service you can deliver with skills you already have is usually the quickest test. If nobody bites after a few honest attempts, change the offer or the audience before you give up on the whole idea. Our guide on how to validate a business idea goes into more detail.

Small early sales are fine before you register. The first £1,000 of trading income in a tax year is covered by the trading allowance, so you don't need to tell HMRC about it unless you have to file a tax return for another reason.

Choose a structure: sole trader or limited company

Most people start as a sole trader. You and the business are the same thing. It's quick to set up, the admin is light and you keep all the profit after tax. The downside is unlimited liability, which means you're personally responsible for any business debts.

A limited company is legally separate from you. Your liability is usually limited to what you've put in, but you take on director's duties, yearly filings with Companies House and HMRC, and some of your details go on a public register. It can be more tax efficient at higher profits, but not always.

There are other structures, such as partnerships, but these two cover most new businesses. We compare them properly in sole trader vs limited company. You can change later, and plenty of people start as a sole trader and set up a company once the business is established.

Register with HMRC or Companies House

As a sole trader, you register for Self Assessment with HMRC once your trading income goes over £1,000 in a tax year. The deadline is 5 October after the end of the tax year you started in. So if you start trading in June 2026, you have until 5 October 2027. You'll need your National Insurance number, and there's a full walkthrough in how to register as self-employed.

A limited company has to be registered with Companies House before it trades. Online it costs £100. You'll need a company name, a UK registered office address, at least one director, at least one shareholder, details of anyone with significant control, and a SIC code describing what the company does. Directors and people with significant control must also verify their identity with Companies House.

Once the company is active, it must register for Corporation Tax within 3 months. If you pay yourself a salary, the company will need to register as an employer and run PAYE too.

Business name rules in the UK

Sole traders can trade under their own name or a business name. A business name can't include 'limited', 'Ltd', 'LLP' or 'plc', can't be offensive, and shouldn't be too close to someone else's trade mark. You must show your own name and your business name on paperwork like invoices and letters.

Company names have stricter rules. The name must end in 'Limited' or 'Ltd' (or the Welsh equivalents), it can't be the same as an existing company's name, and some sensitive words need permission before you can use them. Companies House can also ask you to change a name that's too like an existing one if the other company complains.

Before you get attached to a name, check the Companies House register, search the trade mark register on GOV.UK, and see whether the website domain and social media handles are free.

Bank account, records and tax deadlines

A limited company's money belongs to the company, not to you, so in practice it needs its own business bank account. Sole traders don't have to have one, but a separate account makes your records far simpler and stops personal and business spending getting mixed up.

Keep a record of every sale and every business expense, backed up by receipts, invoices and bank statements. Sole traders must keep records for at least 5 years after the 31 January deadline for that tax year. A spreadsheet is fine at first. If your qualifying income goes over £50,000, Making Tax Digital means you'll need compatible software and quarterly updates. That threshold drops to £30,000 from April 2027 and £20,000 from April 2028.

The main sole trader dates are 5 October to register, 31 January to file your online return and pay, and 31 July for a second payment on account if you have to make them. Income Tax is charged on your total income above the Personal Allowance of £12,570, and Class 4 National Insurance is 6% on profits between £12,570 and £50,270. If you have a job too, your salary uses up the allowance first. The side hustle tax calculator gives a rough idea of what to set aside. You'll also need to register for VAT if your taxable turnover goes over £90,000 in any rolling 12 months.

Insurance, licences, permissions and data protection

Employers' liability insurance is compulsory as soon as you employ someone, with a few exceptions such as only employing close family. It must cover at least £5 million, and you can be fined £2,500 for every day you aren't properly insured. Other cover isn't usually a legal requirement but is often sensible: public liability if you meet customers or work on their premises, professional indemnity if you give advice, and cover for stock and equipment. Home insurance often won't cover business use, so ask your insurer.

Some activities need a licence or registration. Food businesses must register with their local council at least 28 days before they start, and selling alcohol, street trading and many other activities have their own rules. The licence finder on GOV.UK lets you search by activity and nation. If you work from home, check your mortgage or tenancy agreement, and talk to your council if you'll have lots of visitors or deliveries.

If you use personal information on a computer or phone, such as customer names and email addresses, you may need to pay the ICO data protection fee. For most small businesses it's £52 a year, or £47 by direct debit. You're exempt if you only use personal data for things like staff administration, accounts and records, or advertising your own goods and services. The ICO has a short self-assessment on its website to check. Either way, you still have to look after people's data properly.

How to get your first customers

Paperwork doesn't make sales. Once the basics are in place, spend most of your time in front of potential customers. Start with people you already know and the places your customers already spend time, online and off. Tell them plainly what you do, who it's for and what it costs.

Small, steady actions each week beat one big launch. Ask every early customer what nearly stopped them buying and what they'd tell a friend about you. There are more ideas in how to get your first customers.

Keeping going is the part most people underestimate. If a weekly plan and someone checking in on whether you did it would help, that's what Exitnine's accountability tools are built for.