Starting a business is one of those events that can completely transform your life. It forces you to become more resilient and confident. You quickly gain new skills and connections. And you might gain flexibility and control over your work life that you didn’t have before. It can be incredibly rewarding.
There are also plenty of challenges and there’s a lot to consider before jumping in. With just over a third of UK start ups making it past the five year mark, it’s important to do the necessary preparation to make sure your business is successful.
In this guide, we’ll walk you through the process of starting a business from scratch, providing valuable tips to position yourself for both immediate and long-term success.
In a nutshell: The UK is a great place to start a business thanks to its supportive ecosystem and access to funding and resources. Whether you’re launching a side hustle or scaling a growing venture, the key is to start small, stay organised, and focus on what truly matters – solving a real problem for your customers. With the right plan, tools, and mindset, you could turn your idea into a thriving business.
Why start a business in the UK?
The UK has a proud history of entrepreneurship. Since becoming the world’s ‘first industrial nation’ in the 19th century, small and medium-sized businesses have fuelled the country’s innovation and growth. Today, 5.7 million SMEs account for 99.9% of all businesses in the UK.
No matter where you’re based in the UK, your nearest town or city will likely have a Business Growth Hub where you can access free, in-person guidance from business experts and network with other entrepreneurs. And if you prefer not to travel, there’s an abundance of online resources for UK start ups, including Tide’s own business finance blog.
The UK is also a global leader in finance, making it simpler than ever to access the money you need to grow and run your business. Tide has access to a large panel of lenders and can help provide access to dozens of financial products, from business loans to asset finance and much more.
Registering your business (or Self Assessment, if you’re a sole trader) can be done online in minutes for very little cost. And while tax is admittedly a little more complicated to manage, solutions like Tide’s business current account include built-in accounting tools that handle most of your tax obligations for you.
With so much support available, there’s never been a better time to set up a business in the UK.
Setting up a business in six steps
1. Hone your idea
A strong business idea solves a problem for your customers. And while it’s great to turn a passion into a career, your idea also needs to be profitable and sustainable.
Start by finding the sweet spot between what you love and what you’re good at. Enjoy offering relationship advice and have experience writing newsletters? How about creating a modern-day agony aunt Substack with a paid subscription?
If you need some inspiration or want to brainstorm potential opportunities and challenges, AI tools such as ChatGPT can help refine your ideas quickly. But your best insights will likely come from your own market research, which might include sharing surveys, reading industry reports, or speaking to potential customers directly.
Finally, you’ll need a name for your business. Whether you’re looking for something serious or a play on words, try our business name generator. And when you find something you like, you can check its availability with our company name checker.
2. Create a plan
Your road to success will be shaped by your business plan. It doesn’t need to be long, but it does need to include the essentials.
An executive summary providing a snapshot of what your business does and what you want to achieve
A company description explaining what your business does in more detail, why it exists, and who it serves
A market analysis demonstrating the demand for your business, including industry trends, target customers, and competitor insights
An organisation and management section highlighting your team’s expertise, key roles, and operational workflows
A products or services breakdown showcasing what you’re selling, its features and benefits, and the problem it solves
A sales and marketing strategy outlining how you’ll attract and retain customers, including channels, tactics, and sales forecasts
Financial projections for 3-5 years, including income statements, cash flow forecasts, balance sheets, and a break-even analysis
Want to get it right? Our guides on how to write a business plan and how to create a digital marketing strategy will help you step-by-step.
3. Register your business
Now it’s time to make your business official. The first step is choosing your legal structure. In the UK, you’ve got three main options.
Register as a sole trader if you’re going to be self-employed and run the business on your own. You can register with HMRC for free, and you keep all the profits after tax, which you’ll pay through a Self Assessment tax return.
Register as a limited company to form a separate legal entity that protects your personal finances. You can register directly with Companies House or through Tide’s company registration service for a discounted price. You’ll get a free business bank account to keep your finances separate from your personal ones, with built-in accounting tools to help you manage VAT and admin as you grow.
Register as a partnership if you’re setting up with one or more other people. This is similar to being a sole trader, in that you’re personally responsible for your share of the business’s debts. You’ll need to register both the partnership and the individuals for Self Assessment. And you’ll need to dissolve the partnership if any of the partners leave the business.
If you’re not sure which structure best suits your business, our guide on sole trader vs limited company can help you decide.
4. Secure business financing
Starting and growing a new business usually requires some upfront investment – though it is sometimes possible to start a business with no money.
You have plenty of options to consider:
Your own money could be an option if you have savings or a high enough income to cover your initial costs. But make sure you keep enough back to cover your personal costs until your business is generating a stable income.
Business loans give you a lump sum to repay over time with interest, making them suitable for bigger costs like website development or buying inventory.
Start Up Loans are a government-backed option, offering fixed interest rates and repayment terms of 1-5 years. Plus they come with free mentorship which can be invaluable when starting out.
A business credit card can help cover day-to-day expenses, helping you manage costs like marketing or software subscriptions.
Asset finance can help spread the cost of equipment or vehicles over time.
A revolving credit facility lets you borrow, repay, and reuse credit as needed. But you’ll only be able to get one if you have a strong credit history and can demonstrate reliable cash flow.
For now, the days of near-zero interest rates are over, making borrowing more expensive. If you’re concerned about keeping up with repayments, remember starting a business doesn’t have to cost a fortune. You can calculate your start up costs by factoring in fixed and variable expenses, and adding a buffer for the unexpected.
For more on managing your finances, read our guide on how to create a business budget.
5. Comply with regulations
Before you open for business, you must make sure you’re clued up on any regulations that apply to you. Ignoring them could result in penalties, so it’s worth getting it right from the start.
Below are some of the main regulations businesses most commonly need to comply with, but there may be others you need to bear in mind depending on your type of business. So do your research and speak with a specialist if you think this could apply to you.
Consumer rights: Under UK law, you must provide clear information before a sale, including your business details, prices (with taxes), delivery costs, and cancellation rights. Customers have 14 days to cancel most online purchases without giving a reason. And you’ll need to confirm orders promptly, deliver within 30 days (or as agreed), and handle returns and refunds properly.
Tax and reporting: If your turnover exceeds £90,000, you’ll need to register for VAT with HMRC and charge it on sales, filing quarterly returns. Even if you’re not there yet, keep an eye on your turnover as you grow. The Making Tax Digital system means you’ll also need to keep digital records and use compatible software to submit your VAT returns, such as Tide Accounting.
Digital sales: If you’re selling on digital platforms like Etsy, they’ll automatically report your earnings to HMRC if you make over €2,000 or 30 product sales a year. So expect to provide your National Insurance number and address. If you’re making regular sales, you’ll also need to pay income tax and National Insurance on your profits.
Data protection: Under UK GDPR and the Data Protection Act 2018, you need to create a privacy policy for your website, get clear consent from users before collecting their data, and put security measures in place to protect that data. Most website builders include these features, but double-check they meet the requirements. If your business handles personal data, you’ll also need to register with the Information Commissioner’s Office (ICO).
Note: Regulations can change. So always do your own research before launching to make sure you’re fully compliant.
6. Set up your operations
The last step of starting a business is getting everything set up so you’re ready to hit the ground running when you launch.
Depending on your business, you may need business insurance. This isn’t something to skimp on. Insurance keeps you and your business protected if anything unexpected were to happen, to your business directly or to your customers, as a consequence of your business’s operations. The most common types of insurance include: business contents insurance, commercial property insurance, professional indemnity insurance, public liability insurance, employers’ liability insurance, and business car insurance.
Next, it’s time to equip your business with the tools it needs to function. This can include accounting software, a web domain, a virtual office address, a point of sale system, CRM software, or business expense cards for your team.
Once that’s all sorted, you’ll be ready to create your website. This will act as your digital shopfront. It should be simple, easy to navigate, and mobile-friendly, with clear messaging and ‘trust signals’ like a detailed About Us page, customer reviews, or client logos. It’s easier than it sounds, and Tide offers everything you need to create a professional site without any experience.
If you haven't already, set up a business bank account. This is a requirement for limited companies. But while sole traders don’t need to do this, a separate account will make staying on top of your finances and filing tax returns much easier than using your personal account. If you’re a sole trader or partner, set aside 25-30% of your net profits for your tax bill and keep records of all income and expenses.
When you’ve done all of the above, you’ll be ready to launch your business!
Examples of starting a business in the UK
Starting a business can feel like taking a big, scary leap into the unknown. But seeing how others might approach it may provide some reassurance. Here are a few fictional examples of people turning their vision into reality.
The freelance designer
Emma started her graphic design business as a sole trader. She tested her idea by offering basic logo designs on Fiverr, using feedback to refine her services. She kept her business and personal finances separate from day one, tracking time spent on each project to price her work fairly. A simple cash buffer habit (saving 15% of each payment) helped her manage slow months. Now, she’s built a portfolio and uses CRM software to manage client relationships efficiently.
The tech consultant
After years in IT, Ash decided to go it alone as a freelance consultant. He used a virtual office address to keep his personal details private and set up a separate business bank account to simplify his bookkeeping. He also made a habit of reviewing his numbers monthly, which helped him spot trends and adjust his pricing strategy. Now, he’s scaling his business by hiring contractors for specific projects.
The local cafe
Anisha and Tom turned their passion for coffee into a high-street cafe. They started small, testing their menu with a pop-up stall at local markets. Once they validated their concept, they registered as a limited company and secured a business loan to cover their start up costs. They used accounting software to track expenses and stay on top of their VAT obligations, and they invested in public liability insurance to protect their business.
Tips for setting up a business
Want to give you and your business the best chance of success? Bear the following tips in mind.
Start small and test early by launching a minimal version of your product or service to validate demand before investing more heavily
Keep ‘business’ and ‘personal’ mentally separate, by giving your business its own email, phone number, workspace, and finances to stay organised
Track how long core tasks take to help with pricing, spotting bottlenecks, and deciding what to automate or delegate
Build a cash buffer by moving a fixed percentage of each payment into a savings pot for quiet months or unexpected costs
Learn to say no to avoid overcommitting, prioritising work that aligns with your core offer and goals
Ask customers for feedback after each sale or project, then use it to refine your offer and messaging
Document your processes with checklists for repeat tasks to make future hiring or scaling easier
Protect your reputation by setting realistic deadlines and communicating early if something doesn’t go to plan
Review your numbers monthly with a simple summary of income, costs, profit, and cash in the bank
Protect your energy and mental health by planning your week around productive hours and avoiding a business model that burns you out
Wrapping up
Setting up a business doesn’t have to be complicated. Just follow these steps and you’ll be on the right track.
Here’s a reminder of the key points:
Hone your idea by solving a real problem and validating it through research
Create a plan that covers your goals, market, operations, and finances
Register your business with the right legal structure for your needs
Secure financing to fund your growth
Comply with regulations to protect your business and customers
Set up your operations with the right tools, insurance, and processes
Starting a business is an exciting journey, and you don’t have to do it alone. Register your business with Tide for less than going direct to Companies House, and open a free business bank account to keep your finances on track. If you need funding to get things moving, explore our range of business loans and other finance options. With over £1.6 billion lent to UK businesses, we’re here to support your growth.
