A guide on how to start a business in the UK
Starting a business in the UK may feel like an exhaustive process, so in this FAQ we will take you through some key points to help you turn your idea of a dream business and turn it into a reality.
Disclaimer: This Virtuoso Legal article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own solicitor on any specific legal questions you may have concerning your situation.
by Todd Bateman
The first step forward
Deciding to open a business in the UK is an exciting prospect that many people pursue in their lifetimes, however, the statistics don’t look good for new starts up with 90% failing to make it successful.
To make your business stand the best chance of success you will need to be creative and out of the box in every move you make. Starting with your idea, is it something you feel passionate about to put the hours in?
If so, looking at possible competitors in the market will help you understand where there is a niche for your idea. Plotting ideas on how you can improve in a market, what customers you’d want to target and what you can offer better than other businesses should be something you start by answering.
We recommend that you build up your knowledge of the business world by reading books, podcasts, and YouTube videos for example. There is lots of free information on the internet that will be able to help you understand the fundamentals and key terminology of business. You may also need courses or training to pursue the business venture you seek, so it is worth looking at these also.
Protecting your Idea & Brand from the beginning
When it comes to starting a business, you need to know how to protect your brand and the products you sell. Intellectual Property is the hidden part of businesses that include copyright, trademarks, patents and design rights.
When you create your business name and hope to register it to the GOV.UK website, you’ll need to check the name isn’t trademarked by another business or you can be looking at causing trouble down the line.
To know how to protect your brand from infringement from other business, from the name and logo to make sure no one steals your unique ideas and creations, Intellectual property is an investment you will need to familiarise yourself with to protect and expand your business.
Beginning a plan of action
Having a plan is essential for the growth of your business but also for securing finances for a bank loan (more on that later). A business plan should make you feel confident in how you will make your business successful so include all your notes.
- Some essential notes you should include in your business plan are:
- Market research
- Short term and long-term goals
- Finances for your business
- Future forecasting
Deciding your business ownership
The first thing to decide is what you will register your business as in terms of ownership, this will all depend on who you are looking to set up your business with or whether you’re looking to start a business by yourself.
- The most common types of ownership are:
- Sole traders
- Private Limited Companies
- Public Limited Companies
Once you have found the right ownership that works well for you, you can register online at the GOV.UK website.
License and Insurance
When it comes to discovering what license you need, you can use the licenser finder on the GOV.UK website linked here.
Licenses are required in some services such as selling food, also license for the property that your business will operate from. The cost varies in sectors from a few hundred to a few thousand.
Operating in a sector without the required license will result in a penalty or even closure of your business. You will also need to renew your license every year at a cost depending on your business sector so don’t forget to keep renewing or your licensing will become expired.
Furthermore, you will need to look into the right insurance for your business which some are required by law such as employee, to optional insurance like cyber insurance. Business insurance is in place to protect your businesses assets in case anything happens such as everyday risks or damages.
Click here to learn more about business insurance.
Taxation in the UK
Registering tax in the UK depends on what ownership you have registered your business as. For sole traders you will need to register your tax with HMRC, you will also have the responsibility to submit an annual self-assessment tax return.
For limited companies, you will need to register tax with Companies House and pay corporation tax on the profit made from your business activity.
Tax can become complicated, so we have linked some useful resources you should read to expand your knowledge on the tax that is required.
For more VAT click here
For more information on tax click here
Financing your business
To start a business in the UK, you will require the funding to operate from paying for equipment, a place to work and possibly your employees.
There are multiple routes you can take, starting with your savings and the help of your family & friends will mean you won’t have to owe the bank for taking a loan, however, it is risky putting all your savings into a business in case all fails.
When it comes to securing external funding, small businesses may be eligible for a government grant to go towards your business as long as you have the same amount of grant funds ready to invest. To see if your business is eligible for a grant, click here.
- Finally, business loans are the most common way to secure funding for your business. There are 6 points you should consider when finding & choosing a loan:
- Long term loan
- Short term loan
- Fixed-rate loan
- Variable loan
- Unsecured loan
- Secured loan
When searching for a bank to secure a loan from, finding the best interest rate and fees will benefit your business. However, applying for the loans with the lowest interest fees, banks will want to see a solid business plan and cash flow forecast to convince them to loan to you.
Therefore making sure you are confident in your plan is essential to securing a loan. For more information on bank loans click here.
Furthermore, the government offer a start-up loan which is an unsecured, personal loan that can extend to £25,000 to start or grow your business. You can apply for a government loan here.
A final word
Some words of encouragement would be if you are confident in your idea, don’t hold back. As long as you gather all the research you need to stand out in the market and offer something you believe is worth consumers attention there is a good chance you will be successful.
Remember to think like a customer and what they would want to see from your business. Build a business plan and go into detail on how you will conduct your business and you will feel confident going forward.
We recommend seeking professional advice from business advisors who will be able to help you develop your ideas and improve them to help you become successful.