1. Register business name
Coming up with a name for your business is an important step as it shows the personality of your brand and helps you stand out. Your name should be unique and appeal to your target audience – and it’s your chance to be creative.
It’s also worth understanding:
- how to define your brand so you can stand out from your competitors
- what you need to do to protect your intellectual property, including any patents and trademarks
If you’re looking for some light-hearted inspiration, try our Business Name Generator to get you started.
2. Choose a legal structure
Next, you’ll need to choose a legal structure for your business:
- sole trader – the simplest business structure, but with no legal distinction between you and your business
- partnership – if you’re starting a business with a business partner or partners
- limited company – a complex structure with plenty of admin, but your business is legally distinct from you as an individual
If you’re not sure, this guide explains the difference between a sole trader and a limited company.
3. Write your new business plan
A business plan is an important document for a business of any size. It helps you to get an idea of your strategic goals, financials, market research, and potential obstacles.
And as part of any new business strategy, you’ll need to create a budget. The cost to start a business can vary widely – it depends on things like whether you need to buy specialist equipment, rent a business premises, or if you’re running your business from home. Have a look at our budget calculator and cash flow forecast guides for help with planning your budget.
Our guide on how to write a business plan has a more complete overview of writing your plan – plus you can download a free business plan template there too.
4. Secure funding and finance
How much money do you need to start a business? It’ll vary depending on your product or service. But, as mentioned above, you’ll need to think about this question before getting your new venture started.
You might not need much initial investment if you’re starting small.
But if you’ve identified a number of costs in your budget, you should know how you’re going to fund your project. Will you use savings? Or will you ask for help with starting up a new business (for example, loans from friends, family, or a bank)?
Keep in mind you might be able to find grants for new businesses to help lighten the financial burden. The benefit of a small business grant rather than a loan is that you don’t usually have to pay the money back.
It’s worth checking for government funding for new businesses. Another government-backed scheme is the Start Up Loan, available from the British Business Bank. You can borrow up to £25,000 at a fixed interest rate of six per cent per year. You also get 12 months of free mentoring.
Read more about the small business loans available from different lenders.
Crowdfunding is another innovative source of finance. Plus, if you’re a young person looking to start a business, it’s worth checking out the Prince’s Trust, which offers mentoring – and sometimes, funding.
5. Plan your advertising strategy
Now you’ve sorted your finance, it’s time to think about how you’re going to attract customers and grow your business.
When it comes to advertising a new business, you’ll need to consider marketing, branding, and how you’ll balance online and offline promotion.
Here are a few of our top tips:
- do competitor research – competitor analysis helps you understand the market, set your prices, and find a way to stand out
- build a social media presence – social media is a great way to showcase your brand’s personality and tone of voice, connect with customers, and even sell your products with tools like Facebook Shops and Instagram
- create a website with SEO – optimise your website for search engines so people can find your business and understand the products or service you offer
- send emails and newsletters – a simple and cost-effective way to keep in touch with your customers and boost sales
- use flyers and print marketing – a tangible way to reach potential customers
- network at industry events – get to know your industry and make connections at virtual or in-person events
6. Buy your new business insurance
The type of business insurance you’ll need depends on your business. Whether you have an online shop or deliver a service, you can tailor your cover and protect yourself from the costs of everyday risks like accidents, damage and legal fees. You can also add specific covers if you need to protect stock or tools.
You can select from a range of covers:
- public liability insurance – this is important if customers visit your premises or you carry out work on client sites
- professional indemnity insurance – covers you if a client loses money because you provide negligent advice, services or designs
- employers’ liability insurance – this is a legal requirement if you have employees
- legal expenses insurance – covers business legal expenses or prosecution fees
- small business health insurance – affordable healthcare cover for you and your employees
7. Work out what you need to do for tax
Running a business comes with legal and accounting responsibilities, so it’s important you’re clear on what’s involved. There’s a £1,000 tax free allowance, but after that you’re legally required to register with HMRC or Companies House.
Sole traders need to:
Limited companies need to:
- register with Companies House
- pay corporation tax on the profits you make from your business
- file a company tax return
- pay VAT
- as a self-employed person, you’ll also need to send a Self Assessment
One of the benefits of registering as self-employed is you can claim back some of your expenses and reduce your tax bill. Our guide on self-employed tax deductible expenses goes into more detail on the expenses you can subtract from your business turnover when working out how much tax you need to pay.
And a good way to test your business venture without as much financial risk is to start a business alongside full-time employment – but make sure you understand everything about paying tax when you have a side hustle first.
You may also be able to recoup some of the tax you pay with new business tax relief, such as business rates relief and VAT relief.
Finally, be sure to keep up with all the self-employed tax changes that are introduced in April each year.
8. Create a system for keeping business records
After you’ve worked out what you need to do for tax, it’s important to stay organised so you can meet your tax obligations at various points throughout the tax year.
If you don’t have a record-keeping system, you’ll spend a lot of time sorting paperwork when you have to do your Self Assessment – valuable time that could be spent running your business, or on relaxing and recharging. Read more bookkeeping tips here.
Firstly, it’s a good idea to keep your business and personal finances separate. That’s because allowances like tax-deductible expenses can only be for business purposes – it’s much harder to separate money coming in and out when you’re using one account.
Many of the major providers offer a business bank account – here are some of the best.
What’s more, there’s lots of software available that can make record-keeping much easier. Software can do tasks like create and send invoices automatically, and monitor your income and outgoings:
Finally, you’re required to keep business records for a number of years. If HMRC asks for them, accurate and organised business records can help keep you out of trouble in the event of a tax investigation. Read more about how long to keep tax records.
9. Maintain your business with support guides and templates
For more resources on running your business, from conducting a business health check to hiring employees, explore the support guides and templates below.
- get a strategic understanding of your business in terms of strengths, weaknesses, opportunities and threats with our free SWOT analysis template
- selling goods or services means you’ll need to send clients an invoice so you can be paid – read our guide on how to write an invoice and get your free template
- IR35 support and guides for contractors
- how to calculate turnover for your business
- Self Assessment and tax resources
- when you’re ready to hire your first employee, download our free contract of employment template. As your business grows, an organisation chart can help you to keep track of your company’s hierarchy and structure