If you're thinking of starting a small business in the UK, there are several essential legal and administrative steps you'll need to complete. As I’ve recently launched my own business, I’ve compiled a checklist of key actions that have proven invaluable—shared here to help guide others on a similar journey.
Register Your Business
Start by choosing the right legal structure—sole trader, partnership, or limited company. Each structure has implications for liability, taxes, and reporting obligations.
Useful GOV.UK links:
Become a sole trader: What a sole trader is - GOV.UK
Set up a private limited company: Limited companies - GOV.UK
Set up a business partnership: Setting up - GOV.UK
Once decided:
- Sole traders and partnerships must register with HMRC for Self Assessment.
- Limited companies must register with Companies House, where you can also check name availability. Find and update company information - GOV.UK
Open a Business Bank Account
A business account is mandatory for limited companies and highly recommended for sole traders. It helps keep personal and business finances separate. While some providers charge fees, alternatives include using a dedicated personal account for business transactions. It's a good idea to seek financial advice before choosing.
Register with the ICO (Information Commissioner’s Office)
If you process personal data (e.g., customer names or emails), you must register with the ICO and pay a data protection fee.
New fees as of February 2025:
- Small businesses: £52/year
- Medium businesses: £78/year
You can use the ICO’s self-assessment tool to confirm if registration is needed. Does data protection law apply to my business? | ICO
Arrange Business Insurance
At a minimum, if you employ staff, you must have Employers’ Liability Insurance by law. Depending on your sector, you may also need:
- Public Liability Insurance
- Professional Indemnity Insurance
- Cyber Insurance
Use comparison sites or specialist brokers to find the right fit for your business.
Understand Tax and Accounting Obligations
- Sole traders must file a Self Assessment tax return annually.
- Limited companies pay Corporation Tax and file annual accounts.
- VAT registration is required if your turnover exceeds £90,000 (2025 threshold).
Consider using accounting software like Xero, QuickBooks, or hiring an accountant to stay compliant and efficient.
Prepare Legal and Policy Documents
Legal documents protect your business relationships. At a minimum, consider:
- Terms and Conditions
- Client/Supplier Contracts
- Employment Contracts (if applicable)
For your website:
- Privacy Policy
- Cookie Policy
- Terms of Use
Also, work toward GDPR compliance and establish a Health & Safety Policy, even for remote teams.
Register for PAYE if You Employ Staff
If you take on employees, you must:
- Register as an employer with HMRC
- Set up a payroll system
- Comply with auto-enrolment pension obligations
Implement Record-Keeping Systems
Maintain clear records of:
- Receipts and invoices
- Payroll and employment data
- Tax submissions
By law, most records must be kept for at least 5 years. Good systems make compliance easier and support business growth.
Obtain Licences or Permits (if required)
Certain businesses require licences—e.g., those selling alcohol, offering financial services, or running childcare services. Use the UK government’s licence finder to check what applies to you.
Build Your Online Presence
Secure a domain name and launch a website. Also:
- Set up business profiles on Google Business, LinkedIn.
- If VAT-registered, look into Making Tax Digital requirements
While some steps depend on your business model, many of the above are non-negotiable—particularly those related to data protection, tax, and insurance. Taking the time to get these right from the outset will save you time and money down the line.
If you need support with drafting contracts, creating essential policies, or understanding data protection requirements, please don’t hesitate to get in touch.