Step-by-step guide to starting a business in the UK: structure, registration, tax, bank account, and startup essentials — with support from Leader Accountancy.
Thinking about starting a business in the UK, but your brain is already spinning with words like Companies House, HMRC, CIS, VAT, limited company, sole trader… and 100 other acronyms?
You’re not alone.
The good news: you don’t need to know everything on day one.
But you do need a clear, practical roadmap — and that’s exactly what this guide gives you.
In this article, we’ll walk you through:
- How to know if your idea is actually worth pursuing
- What business structure to choose (sole trader vs limited company vs partnership)
- How to register your business the right way
- The boring-but-essential things (tax, bank accounts, insurance, bookkeeping)
- The fun bits (brand, website, marketing, clients!)
- Where Leader Accountancy can take the heavy admin off your plate
If you follow this step by step, you’ll go from “I’ve got an idea” to “I’ve got a real business” — without guessing or Googling every 5 minutes.
1. Get Clear on Your Idea (and Why Anyone Should Care)
Every business starts with an idea. But not every idea deserves your time, money and stress.
Ask yourself three brutal questions
- What problem am I solving?
People pay to make a pain disappear: lack of time, lack of knowledge, lack of convenience, lack of joy. - Why would someone choose me over others?
This is your USP – Unique Selling Point. It doesn’t need to be fancy. It could be:- Faster service
- Lower price (careful with this one)
- Niche expertise (e.g. “bookkeeper for beauty salons”)
- Better customer experience
- Would I honestly pay for this?
If you wouldn’t, others probably won’t either.
Try to summarise your USP in two sentences. You’ll use this everywhere: website, social media, networking, even WhatsApp chats.
2. Choose the Right Business Structure (This Affects Tax & Risk)
This is where many beginners freeze. Let’s keep it simple. In the UK, the main business structures are:
Sole trader
- You = the business
- Easiest to set up
- You keep all the profits
- But: you have unlimited personal liability (if the business gets into debt, you personally are on the hook)
Partnership
- Like a sole trader, but two or more people
- You share profits and responsibilities
- You also share risks — if your partner messes up, you can be affected
Limited liability partnership (LLP)
- A partnership with extra legal protection
- Often used by professional firms (law, accounting, etc.)
- Partners’ personal liability is more limited
Limited company (Ltd)
- The company is a separate legal entity
- You’re a director/shareholder, not “the business”
- Often better for:
- Higher profits
- Reducing personal risk
- Raising investment
- Looking more “serious” to clients and lenders
Quick rule of thumb
- Just testing an idea, low risk, low turnover at first → sole trader may be fine
- Planning to grow, hire staff, sign big contracts, or protect your personal assets → limited company is usually better
This decision has tax and legal implications.
Leader Accountancy can help you pick the best structure for your situation (not a generic one-size-fits-all answer).
3. Register Your Business Properly
Once you’ve chosen a structure, it’s time to make it official.
If you’re a sole trader
You’ll need to:
- Register with HMRC for Self Assessment
- Keep records of all income and expenses
- File a tax return each year and pay Income Tax + National Insurance
If you’re forming a limited company
You must:
- Register the company with Companies House
- Choose a company name (and check it’s available)
- Provide details of:
- Director(s)
- Shareholder(s)
- Registered office address
- Register with HMRC for:
- Corporation Tax
- Possibly PAYE (if you pay yourself a salary or hire staff)
- Possibly VAT (depending on turnover and strategy)
Many banks and platforms now offer company formation + business account bundles. That’s convenient — but remember they don’t give you personalised tax planning. That’s where a firm like Leader Accountancy comes in.
4. Separate Your Money: Business Bank Account & Basics
Even if you’re “just starting”, mixing personal and business money is a fast track to chaos.
At minimum, you should:
- Open a business bank account
- Use it only for business income and expenses
- Keep receipts, invoices and bank statements organised
This makes:
- Bookkeeping easier
- Tax returns less painful
- HMRC enquiries far less scary
If you’re a limited company, a separate business account isn’t just “nice to have” – it’s effectively essential.
5. Sort Your Tax & Legal Essentials (Don’t Skip This)
This is where many new entrepreneurs get caught out. Don’t be one of them.
5.1 Register for the right taxes
Depending on your situation, you may need:
- Self Assessment (sole traders, partners, some directors)
- Corporation Tax (limited companies)
- PAYE (if you have employees or pay yourself a salary as a director)
- VAT (mandatory once you hit the threshold; sometimes beneficial to register earlier)
- CIS (Construction Industry Scheme, if you’re a contractor or subcontractor in construction)
5.2 Think about insurance
Even small businesses may need:
- Public liability insurance
- Professional indemnity insurance
- Employers’ liability (if you have staff)
- Contents or equipment insurance
A good broker or advisor can help you choose the right cover, but your accountant can flag the risk areas to think about.
6. Set Up Smart Systems from Day One (Future-You Will Say Thank You)
You don’t need a complex tech stack, but you do need some tools.
Core tools to consider
- Accounting software (for tracking income, expenses, invoices, VAT, CIS, payroll etc.)
- Cloud storage (Google Drive, OneDrive, Dropbox) for documents
- Basic office tools (Google Workspace or Microsoft 365)
- Password manager (to avoid “mypassword123” for everything 🙃)
Why this matters
- You can see your numbers in real time
- You avoid last-minute panic at year-end
- You can make better decisions (Can I hire? Can I buy that van? Can I pay myself more?)
Leader Accountancy can recommend software and even help you set it up so everything talks nicely to HMRC.
7. Build a Brand People Remember (Without Spending a Fortune)
You don’t need a £5,000 logo. You need clarity + consistency.
Start with:
- A simple name (easy to say, spell and search)
- One clean logo (Canva is fine to start)
- 2–3 brand colours
- A clear message:
- Who you help
- What you do
- Why it matters
8. Get Online: Website & Socials That Actually Work
Website: your digital shop window
At minimum, your site should include:
- What you do (plain English, not buzzwords)
- Who you help
- Where you’re based / which areas you serve
- Services & pricing (even if it’s “starting from £…”)
- Contact options (form, email, phone, WhatsApp)
- Legal bits: privacy policy, terms, cookies
You can start with:
- WordPress, Wix, Squarespace or similar
- A simple one-page site is better than waiting months for “perfect”
Social media: pick channels with purpose
You don’t need to be everywhere.
For most UK small businesses:
- Instagram – visuals, stories, behind-the-scenes
- Facebook – local community, groups, older demographics
- LinkedIn – B2B, professional services
- TikTok – if you’re willing to be on camera and your audience lives there
Use social to:
- Share tips
- Show your work
- Answer common questions
- Build trust
9. Find Your First Customers (Before You Overthink It)
You don’t need a million followers to start. You need your first 5–10 real customers.
Start with your existing network
- Friends
- Family
- Colleagues
- Old clients/employers
- Local businesses
Tell them:
“I’ve started [TYPE OF BUSINESS]. I’m taking on a small number of clients. If you know anyone who needs [RESULT], I’d really appreciate an intro.”
Offer a strong first impression, not endless discounts
- Deliver high-quality work
- Communicate clearly
- Show up when you say you will
- Ask happy clients for:
- Testimonials
- Google reviews
- Referrals
10. Understand Your Numbers (So Your Business Doesn’t Eat You Alive)
“Sales are vanity. Profit is sanity. Cash is reality.”
From day one, keep an eye on:
- Turnover – total sales
- Profit – what’s left after costs
- Cash – what’s actually in the bank
Create a simple monthly rhythm
Every month:
- Check income vs expenses
- Put money aside for tax
- Review which offers/services made the most profit
- Decide what to tweak next month
You can do this in a spreadsheet, but accounting software + an accountant will make it far easier and more accurate.
11. Know When to Bring in Professionals (Hint: Earlier Than You Think)
You can do everything yourself. But that doesn’t mean you should.
An accountant can help you with:
- Choosing the best business structure
- Registering with HMRC and Companies House
- Setting up payroll, VAT, CIS if needed
- Claiming all legitimate tax-deductible expenses
- Avoiding nasty surprises from HMRC
- Planning how to pay yourself tax-efficiently
Think of an accountant as part of your business toolkit, not just someone you see once a year.
12. The Reality: Mindset Matters as Much as Money
Even with the perfect checklist, building a business is still emotional:
- Some days you’ll feel unstoppable
- Some days you’ll want to google “jobs with no decisions”
That’s normal.
What matters is:
- You keep learning
- You ask for help (not suffer in silence)
- You adjust course instead of giving up
The most successful founders aren’t the ones who never fail — they’re the ones who keep going intelligently.
Conclusion: Start Smart, Not Stressed – Let Leader Accountancy Help
Starting a business in the UK doesn’t need to be a mystery or a gamble.
If you:
- Pick the right structure
- Register properly
- Separate your money
- Set up basic systems
- Get the right advice early
…you’ll give yourself a real shot at building something that lasts.
Leader Accountancy can help you at every stage:
- Choosing between sole trader, partnership, LLP or limited company
- Registering with Companies House and HMRC
- Setting up accounting software, payroll, VAT and CIS
- Planning how to pay yourself and grow safely
👉 Ready to turn your idea into a real UK business?
- Fill in the contact form on the Leader Accountancy website and tell us about your plans.
- Visit our site to explore more guides on tax, business structures and Self Assessment.
- Or send us a message on WhatsApp to speak directly with our team and get practical, friendly advice.
Start strong. Start smart. And don’t start alone.
FAQs: Starting a Business in the UK
1. Do I need a business plan to start a business in the UK?
Legally, you don’t need a formal business plan to start trading. However, a clear plan makes it much easier to understand your numbers, set goals, attract funding, and avoid expensive mistakes. Even a simple one-page plan covering your target market, pricing, costs and marketing is better than none.
2. Should I set up as a sole trader or a limited company?
It depends on your goals, risk level and expected profits. Sole trader is simpler and faster to set up, but you have unlimited personal liability. A limited company offers more protection for your personal assets and can be more tax-efficient as you grow, but involves more admin. An accountant can help you choose the best structure for your situation.
3. How much money do I need to start a business?
Some businesses can start with very little cash (for example, service-based or online businesses), while others require more investment for stock, equipment or premises. The key is to list your essential startup costs, separate “must-haves” from “nice-to-haves”, and avoid overspending before you have paying customers.
4. Can I start a business while still employed?
Yes, many people start a side business while keeping their job. You’ll need to check your employment contract for any restrictions and make sure you declare all income to HMRC. If you’re a sole trader, you’ll usually need to register for Self Assessment and complete a tax return each year.
5. When do I need to register with HMRC or Companies House?
If you’re a sole trader, you must tell HMRC about your new business and register for Self Assessment by 5 October following the end of the tax year in which you started trading. If you set up a limited company, you must register with Companies House before you start trading as that company, and then register the company for Corporation Tax with HMRC.
6. Do I need a separate business bank account?
If you run a limited company, a separate business account is effectively essential because the company is a separate legal entity. Sole traders are not legally required to have a business account, but it’s still strongly recommended, as it keeps your business and personal finances separate and makes bookkeeping and tax returns much easier.
7. Do I need an accountant from day one?
You’re not required to use an accountant, but professional advice early on can save you time, stress and money. An accountant can help you choose the best structure, register correctly with HMRC and Companies House, set up accounting software, and make sure you’re claiming all allowable expenses and staying compliant.
8. How can Leader Accountancy help me start a business?
Leader Accountancy can guide you through every step of starting a business in the UK, including choosing the right structure, registering your business, setting up bookkeeping and tax systems, and planning how to pay yourself efficiently. We provide practical, friendly support so you can focus on building your business with confidence.