How to start a small business in the UK: a step-by-step guide (2023)

Starting a small business is exhilarating. Not only do you get to be your own boss, but you also get to bring something to life that’s entirely yours – the success lies entirely on your shoulders.

Although many aspiring entrepreneurs have great ideas outlined on paper, only a few people actually know how to start a small business.

You need a solid business idea to build a successful small business. However, there are several other things you also need to have in place—a bank account, a website, business insurance, and so on.

This guide highlights some essential things no entrepreneur should overlook when building a new business.

Table of Contents

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First Steps

Starting a small business can feel overwhelming at first. To help make it manageable, it is best to divide the process into steps — one thing at a time. Let’s dive in!

How to start a small business in the UK: a step-by-step guide (1)

1. Do market research to guide your finances

What do people typically pay for what you’ll be selling? Are there similar offerings already in your area — is there an area that is entirely without them? What kinds of businesses in your field seem to struggle? Which ones seem to thrive?

All right, maybe you’ve developed an innovation that’s so original there’s no precedent.

But, just in case you didn’t, look at how other businesses in your chosen arena operate and then apply that knowledge to build your expectations. But, of course, that doesn’t mean your dog grooming salon will run precisely the same as the others in town. But in general, in business and in life, the best indicator of the future is the past. So before you start a small business yourself, see what else has already been done.

2. Write a thorough business plan

To start a small business, you first need a plan articulating your vision, strategy, and expectations. Spelling out everything will clarify your picture of your business. Of course you can’t plan for everything, but plan for everything you can.

The UK government also offers a free learning centre to help you flesh out your business plan more thoroughly.

(Video) HOW TO START A BUSINESS UK | A step-by-step guide to starting your own small business

3. Pick out a name

You’ll need this before you can fill out any forms or introduce yourself to anyone. So you’ll need a name to start a small business. When selecting one, it’s a good idea to be a bit creative.

Before telecom manufacturer Blackberry decided on that namesake, they were going to call themselves ‘The MegaMailer.’ Then they hired a Californian consulting group that chose the name ‘Blackberry’, a name they came up with after concluding the buttons on the device looked vaguely like the seeds on a strawberry, but that blackberry was more fun to say.

There’s no hard-and-fast rule when naming your business. Just use your best judgment and make it memorable.

4. Join a niche community

You’ll need all the advice and guidance you can get to start a successful small business in the UK. And, this is where niche communities come in.

A niche community is an online group where like-minded people hang out and share their experiences, including wins and losses.

By being a part of a niche community, you’ll get the opportunity to ask questions (and get responses), discuss with more experienced professionals, and even find potential partners—in case you decide to expand your business in the future.

Like ones on Reddit, several niche communities feature regular Ask Me Anything (AMA) sessions where successful business owners take out time to share their experiences in response to people’s questions. These can provide perfect opportunities for you to get qualified advice.

There are several niche communities to join, depending on your target niche and business type. In addition, you’ll find tonnes of niche groups on social media platforms like Facebook, LinkedIn, and Reddit.

5. Gather sufficient funds

Money is critical for starting a business. So, in addition to brainstorming an excellent business idea, you’ll have to raise funds for your small business.

There are several ways to raise capital. Some options include:

  • Crowdfunding
  • Taking out business loans
  • Bootstrapping your business
  • Enrolling in grant programs
  • Selling some personal assets

As a rule, ensure you have enough capital before starting a new business.

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Getting The Paperwork Sorted

Probably everyone’s least favourite part, but extremely necessary. Having all your paperwork sorted out from the beginning will save you time and headaches in the future.

How to start a small business in the UK: a step-by-step guide (2)

(Video) 10 Things You MUST DO BEFORE Starting Your Business (UK) 2022

6. Decide what kind of business you are from a legal standpoint

Are you a limited liability corporation (LLC) or a sole trader (who is responsible for all their debts)?

Find out what kind of business yours is and how to register it here.

7. Register for taxes

Filing your taxes as a small business is a bit different than filing your taxes as an individual. There’s a different tax rate, you’re eligible for a host of other cuts and rebates, and you’ll also have to be on top of how and when you’ll have to pay taxes on your business.

There’s a lot to cover, and you’ll want to get in touch with a professional. To help our UK clients get started, though, here’s a great primer from Crunch about filing self-assessment taxes.

Depending on your country and business structure, you may or may not be legally required to create a separate business account, but many banks require it when you want to avail yourself of loans or other assistance.

Not to mention it’s just good business sense. The small amount of savings that you might garner from using your personal account won’t compare to the benefits you can gain from it. If you’re in the UK, we recommend reading this guide about the different sorts of bank accounts on offer.

UK UENI customers can sign up here a business bank account with Tide through the UENI Hub and get £50 cashback! If you are not a UENI customer yet, you can sign up here

9. Obtain all business licenses and permits

To do this properly, you need to make sure that you dot your I’s and cross your T’s. Legally speaking, this means you’ll have to have whatever licenses and permits your business will require, as well as be a properly registered company.

We recommend first reading Tide’s blog post on registering as a limited company or a sole trader. If you’re interested in setting up a limited company, Crunch has an easy guide for that.

10. Obtain the required business insurances

“Does my business need insurance?”

If you’re asking this question, the answer is almost certainly “yes”. There’s a lot to cover here – from making sure you have coverage for your employees and making sure any tools or equipment are covered to liability to deciding whether or not you’d be better off with a bundled package – and it can get a little overwhelming.

For our UK-based clients, we recommend GoSuperScript. They have an excellent primer on the sorts of insurance you can expect to be required to have. You’ll find that article here.

(Video) Step-By-Step Guide To Growing Your Business in 2023 (UK Business Owner)

11. Issue invoices

Successfully issuing invoices is another cornerstone of successfully starting a small business because that’s ultimately how you’re going to ensure that you’re being paid a fair amount for your work.

For our UK clients looking for more information about when to issue an invoice, check out this article from SumUp.

If you’re looking for a software alternative for generating an invoice, rather than doing it from scratch, Freshbooks can help you.

Getting Your Business Online

While all the regulatory, necessary stuff is getting done, you should already be planning the beginning of your marketing strategy.

As any digital marketer would advise you – it all starts with a small business website. Even if you don’t sell your products online, you can have a simple presentational website that showcases your brand, products, or services so that your visitors can get a good idea of what you do.

How to start a small business in the UK: a step-by-step guide (3)

12. Every small business needs visibility

Want to build a thriving small business? Implement strategies that will help put your business in front of your customers.

Creating a small business website is one way to stay visible. UENI helps small business owners create highly customizable and mobile-responsive websites for their brands. With UENI, you can get a functional website in the shortest time imaginable regardless of your business type.

13. Set Up & maintain your social media

Contrary to what some people might think, creating social media for your business does not mean you’re destined to shout into the void with offers, promotions, and more.

You can certainly engage with your audience, but another vital part of making sure your social media exists and is up to date is to help build legitimacy.

In other words, when people are looking up your business, they often expect to find a couple of social media accounts linked to your company. It’s not just enough to set them up, though: an abandoned social media page could even look worse than not having one at all.

That’s why maintaining your social media presence is so important. We would say that having a well-kept Facebook account is a more significant win than having five or six different social media accounts that you never use.

On UENI’s Reputation Plan, we provide an excellent tool for managing your business page over crucial platforms like Facebook, Google My Business, and more. You can check all of our plans on ueni.com

14. Link your website with key business platforms

Similar to social media, key business platforms allow you to reach a wider audience by making sure your business appears where your customers are searching for it.

When you’ve linked your page correctly, customers can buy things from your business without having to land on your page at all. In addition, this positive user experience often leads to an increase in sales because making it easy for the user is the name of the game when it comes to conversions.

At UENI, we allow businesses to link their products with the Facebook Marketplace, Instagram Shopping, and Google Shopping – if someone finds your shop through a Search or on a social media feed, they can purchase one of your products directly where they’ve seen it, without having to head to a different website and navigate a separate checkout process.

Remember: immediate satisfaction is the name of the game. If someone can buy something now, it’s almost always better than forcing them to buy something later.

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15. Run email marketing campaigns

Email marketing is sometimes seen as passé, and while it’s true that it’s not a shiny new platform, it still has many advantages when it comes to helping your business succeed.

We discovered some interesting findings when we looked at our own email marketing engagement, and the truth is, nearly every small business should be doing more on the email front.

It’s a great place to put promotional offers and start stoking the Fear of Missing Out.

16. Run paid ad campaigns

Right off the bat, we have to acknowledge the elephant in the room. Paid Advertising is really only worthwhile if you honestly have the budget for it.

If you want to get into Paid advertising but don’t want to spend more than $10 or £10, you’re going to have a bad time, especially for competitive keywords and search terms.

Because we want small businesses to have the chance to compete, our Plus and Reputation Plans come with the opportunity to get a significant discount on credits for Google AdWords.

We’ve written a complete guide on the best ways to use AdWords, but if you feel comfortable with your keywords and with your spend, it can be a powerful tool to help boost your business.

Still not convinced? Take a look at this article from Main Street ROI for some more reasons why Google Ads can be a wise investment.

17. SMS your customers

The last thing we’ll recommend to you as far as marketing your page is to communicate with your customers via SMS. We’re big fans of using texting as a way to do live chat via WhatsApp, but you can also use text messages to send clients and customers promotions, deals, and other updates.

Now, of course, you have to be very careful when you market by SMS. No one likes getting a bunch of spam directly to their phone.

If you want to get it right, we recommend this guide on SMS marketing from EZTexting.

Evolve As You Go

How to start a small business in the UK: a step-by-step guide (4)

Still wondering how to start a small business? Well, the final tip on the list is to get started—and tweak things along the way.

Many aspiring business owners never start small businesses because they believe that everything needs to be put in place perfectly before starting. So they get overwhelmed and lose their motivation to execute their business ideas. Make sure you avoid this mistake.

Got funds and a product or service idea that people are already paying for? Put your business in motion. Launch your website, proactively market your business, and make other necessary tweaks as the company expands.

Everything doesn’t have to be perfect when you start. So move your business from that sheet of paper, set it in motion, and commit to evolving as you go. Let UENI help with your online presence, get an affordable yet professional website today!

FAQs

How do I start a small business from home UK? ›

Starting your own business from home
  1. Set out your working from home idea(s) Knowing your product inside-out will give you a solid foundation when you start a business from home. ...
  2. Put together a home business plan. ...
  3. Make your home business-ready. ...
  4. Think about home business insurance. ...
  5. Registering your home business.
18 Aug 2021

Do I need a license to start a business UK? ›

Business licence – do I need one in the UK? In general, you can set up a small business without a business licence. All you need to do is set up as self-employed, choosing a legal structure for your business and registering with HMRC. But many specialised business activities need you to have a business licence.

What are the 5 steps needed before opening your own business? ›

Take the first steps toward turning your idea into a business.
  • Find Startup Costs.
  • Research Your Market.
  • Make a Business Plan.
  • Licenses & Permits.
  • Government Grants.

Do you need a license to run a business from home UK? ›

No special licence is required when you run a business from home. Some businesses require licences anyway, whether you run them from home or from special work premises. Businesses that require licences include: Loans and financial services.

What is the easiest business to start UK? ›

Best small business ideas to start in 2022
  • Start a dropshipping business.
  • Design and sell print-on-demand t-shirts.
  • Launch your own book.
  • Create digital products or online courses.
  • Sell print-on-demand posters, greeting cards, and prints.
  • Start a charitable business.
  • Sell a service.
  • Create an online fashion boutique.
3 Jun 2022

How do I start my own business as a beginner? ›

9 steps to starting your own business
  1. Register business name. ...
  2. Choose a legal structure. ...
  3. Write your new business plan. ...
  4. Secure funding and finance. ...
  5. Plan your advertising strategy. ...
  6. Buy your new business insurance. ...
  7. Work out what you need to do for tax. ...
  8. Create a system for keeping business records.
11 Mar 2022

How do I start a beginner business? ›

How to start a business in 11 steps
  1. Discover your big idea.
  2. Research your product and audience.
  3. Calculate your startup costs.
  4. Source products.
  5. Figure out your shipping strategy.
  6. Develop a brand strategy and brand identity.
  7. Build and launch your website.
  8. Register your business.
30 Sept 2022

What happens if you don't register your business UK? ›

Yes you are able to operate in the uk without being a registered company. This is classed as a sole trader. You will still need to complete tax returns.

Do I need to declare my small business UK? ›

Registering for VAT

If you have a turnover of more than £85,000, you'll need to keep digital tax records and submit VAT returns using HMRC's Making Tax Digital system. If your business has a taxable turnover of £85,000 or more, you will need to register for VAT.

How much does a business license cost UK? ›

Application fees range between £40 and £2900. Find out more about data protection fees here and learn how to keep your business GDPR compliant with our guide.

What are the 4 things you need to start a business? ›

The point is to always take the next step.
  • Determine Your Business Concept. ...
  • Research Your Competitors and Market. ...
  • Create Your Business Plan. ...
  • Choose Your Business Structure. ...
  • Register Your Business and Get Licenses. ...
  • Get Your Finances in Order.

When starting a small business it's important to remember? ›

When starting a small business, it's important to remember: learning from others and gaining relevant business experience improves the odds for success.

Is it illegal to live at your business UK? ›

In short, yes you can live in a commercial property... but only if you convert its status to residential first.

Can I use my home as a business UK? ›

Permissions. To run a business from your home, you may need permission from your: mortgage provider or landlord. local planning office - eg if you're planning on making major alterations to your home.

Can I sell things without being a business UK? ›

In many cases you can trade without a business licence in the UK, but you must make sure that you are properly registered with HMRC; you can follow the steps to set up your business here. This is a compulsory step in owning a business, and should be done no more than three months after you start trading.

Which business is best for beginners? ›

Best Small Business Ideas
  1. Handyman. Image Source. ...
  2. Woodworker. ...
  3. Online Dating Consultant. ...
  4. Sewing and Alteration Specialist. ...
  5. Freelance Developer. ...
  6. Personal Trainer. ...
  7. Freelance Graphic Designer. ...
  8. Life/ Career Coach.
21 Oct 2022

What business are in demand UK? ›

List of Business Ideas for the UK
  • Brexit Business Lawyer. ...
  • Personal Budget and Money Management Service. ...
  • Affordable Seniors Living Complex Company. ...
  • Smart Technology Property Management Group. ...
  • Import and Export Trade Consulting Firm. ...
  • Employment and recruitment specialist. ...
  • Warehouse and Storage Company.

What business is the most profitable in UK? ›

Most Profitable Industries in the UK in 2022
  • Pension Funding in the UK. $24.1B.
  • Banks in the UK. $17.4B.
  • Legal Activities in the UK. $12.4B.
  • Management Consultants in the UK. $10.2B.
  • Computer Consultants in the UK. ...
  • Construction Contractors in the UK. ...
  • Security & Commodity Contracts Brokerage in the UK. ...
  • General Insurance in the UK.

What are at least 2 things needed to start a business? ›

Some of the basic things you may need to start a small business include:
  • Idea backed by market research.
  • Business plan.
  • Funding and bank account.
  • Business structure (corporation, LLC, etc.)
  • Doing business as (DBA) name.
  • Employer identification number (EIN)
  • Business location.
  • Licenses and permits.

How can I start my own business with no money? ›

Here are some tips on how to start a business with no money.
  1. Vet Your Business Idea. ...
  2. Tap Into Free Resources. ...
  3. Network With Communities of Support. ...
  4. Live on Personal Savings. ...
  5. Look for Alternate Funding Options.
6 Jul 2022

What should be included in checklist for starting a business? ›

Starting a business checklist
  • 1 Make key decisions. Get help to start. ...
  • 2 Plan your business. Develop your business plan. ...
  • 3 Set up your business finances. Get resources to help with business finances. ...
  • 4 Protect your business. Meet work health and safety requirements. ...
  • 5 Know the law. ...
  • 6 Hiring people. ...
  • 7 Keep required records.
2 Nov 2022

How do I start my own business from scratch without experience? ›

Steps to Becoming an Entrepreneur with No Experience (Or Money)
  1. See Your Inexperience as an Advantage. ...
  2. Identify a Good Idea. ...
  3. Focus on Your Strengths. ...
  4. Market Research. ...
  5. Write a Business Plan. ...
  6. Test the Market. ...
  7. Use Free Resources. ...
  8. Get Funding.
22 Oct 2022

What is the money needed to start a business? ›

Estimate your costs.

According to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000. While every type of business has its own financing needs, experts have some tips to help you figure out how much cash you'll require.

Can I start a business with no idea? ›

Starting a business when you don't have any ideas is challenging but not impossible. Beginners like yourself can still come up with a big idea. You just have to keep working at it and not give up. Don't be afraid to try the techniques I discussed in this article.

How do I register a business name UK? ›

You can register your business with Companies House online, which costs £12. You'll also register for corporation tax at the same time. At this stage you'll need to decide a registered office address and include a SIC code.

Do I need to register my business if I earn less than 1000? ›

The trading allowance is an allowance of £1,000 that's available to some sole traders. As of 6th April 2017, if you're a sole trader with income from your business of under £1,000 a year, then you don't have to register for Self Assessment with HMRC, or pay tax on your business income.

How much money can you make before a hobby becomes a business? ›

If you're under 65 and filing as an individual, you must declare your hobby earnings if they total $12,400 or more when combined with your other income. If you're married and filing jointly, the threshold is $24,800 if both spouses are under 65.

Do you have to pay to register a business UK? ›

You can register by post using form IN01. Postal applications take 8 to 10 days and cost £40 (paid by cheque made out to 'Companies House'). Send your application to the address on the form.

Do I have to pay tax on my small business UK? ›

If your business earns between £12,501-50,000, you'll pay a basic 20% income tax rate. If your earnings fall between £50,001 and £150,000, you'll pay 40%. A 45% rate applies to businesses with a taxable income of £150,000 plus. You'll also need to send a self-assessment tax return every year and pay National Insurance.

Do HMRC check small businesses? ›

HMRC only investigates a small handful of sole traders each year, and most of these are selected due to suspicions that they may be concealing income or have entered incorrect figures during their self assessment.

How much can a small business earn before paying tax UK? ›

If you're self-employed, you're entitled to the same tax-free Personal Allowance as someone who's employed. For the 2022-23 tax year, the standard Personal Allowance is £12,570. Your personal allowance is how much you can earn before you start paying Income Tax.

Do you need a sellers permit in the UK? ›

If you're planning on selling products online in the United Kingdom, you don't need to obtain a business license. At the same time, as a UK online seller, you are required to register with HM Revenue & Customs.

How do I set up a new company UK? ›

Set up a limited company: step by step
  1. 1 Check if setting up a limited company is right for you Show. ...
  2. Step 2 Choose a name Show. ...
  3. Step 3 Choose directors and a company secretary Show. ...
  4. Step 4 Decide who the shareholders or guarantors are Show. ...
  5. Step 5 Prepare documents agreeing how to run your company Show.

Do you need a license to start a business at home? ›

1. General Business License. Any business, including home-based businesses, must obtain a local city or county business license.

Do you pay more council tax if you run a business from home? ›

What if I work from home? If you work from home, the council may charge business rates for the part of the property used for work, and you will have to pay council tax for the rest of the property (although your property's valuation band may change).

What should I sell to make money? ›

What Can You Sell to Make Money Fast?
  • Old clothes. If you're looking for things to sell to make quick cash, your clothes just might top the list. ...
  • Sneakers. Have some cool sneakers you want to get rid of? ...
  • Jewelry. ...
  • Watches. ...
  • Your wedding dress. ...
  • Baby items. ...
  • Home décor items. ...
  • Holiday decorations.
5 days ago

What business can I start immediately? ›

30 profitable home based business ideas
  • Buy products in bulk and sell them online.
  • Sell homemade products.
  • Start a dropshipping store.
  • Start a print-on-demand business.
  • Offer online services.
  • Teach online classes.
  • Productize your service or expertise.
  • Grow an audience you can monetize.
8 Sept 2022

What business can I do from home UK? ›

60 UK home business ideas for 2022
  • Website consultant. These days it's rare for a business not to have a website. ...
  • Upholstery/furniture repair. ...
  • Medical billing. ...
  • Herb farming. ...
  • Voice over. ...
  • Babysitting. ...
  • Bed & breakfast. ...
  • Car cleaning.

Can you run a shop from your house? ›

If running a business from your home is unlikely to cause any disruption or be noticeable to your neighbours or anyone outside the property, it is unlikely that you will need planning permission.

How much can a small business make without paying taxes? ›

If you operate your business as a pass-through, meaning the income is taxed as part of your personal income, then the tax-free threshold (also called the standard itemized deduction) for 2021 income is $12,550 for individuals and $25,100 for married couples filing jointly.

How much can a small business earn before paying tax? ›

For the 2019-20 financial year, the tax-free threshold for individuals is $18,200. If your business is structured as a company, you're required to pay tax on every dollar the company earns.

How much can you earn before declaring self-employed UK? ›

If you're self-employed, you're entitled to the same tax-free Personal Allowance as someone who's employed. For the 2022-23 tax year, the standard Personal Allowance is £12,570. Your personal allowance is how much you can earn before you start paying Income Tax.

How much can you earn before registering as a business UK? ›

Once your turnover exceeds £1,000, you need to register for Self Assessment. This is the process by which you file your tax returns and let HMRC know how much Income Tax you owe.

How much can you earn self-employed before paying tax UK? ›

You do not pay tax on things like: the first £1,000 of income from self-employment - this is your 'trading allowance' the first £1,000 of income from property you rent (unless you're using the Rent a Room Scheme) income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates.

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