So you’re thinking of starting your own business? We’ve got some tips for getting started – from writing a business plan to understanding tax, benefits, and legal structures as a new business owner.
While it may seem overwhelming, with passion and dedication you could join one of the six million small and medium sized businesses in the UK.
Ready to go? Read our nine-step guide on how to start a small business in the UK.
Of course, the first thing you need to do is choose your business idea. It should be something you’re passionate about so you’re happy putting your time, money and energy into making it a success.
Start by checking if a product or service is viable by looking at Google Trends, conducting market research, or even building a blog or social page to test if there’s interest.
You’ll need to find a niche so you can stand out to customers – is there a gap in the market for something? Can you make use of specific skills and experience you have already? Do you have a unique perspective on something?
Next, think about whether you want to start an online business or if you need physical premises. If you're thinking of setting up an online shop then it could make more financial sense to start your business from home.
Still stuck for ideas? Check out the business trends in 2021 for more inspiration.
Aside from a great idea that you’re passionate about, you’ll also need:
Follow our checklist below to get started with your new business:
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:
If you’re looking for some light-hearted inspiration, try our Business Name Generator to get you started.
Next, you’ll need to choose a legal structure for your business:
If you’re not sure, this guide explains the difference between a sole trader and a limited company.
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.
Read our guide for more information, and download your free business plan template.
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.
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:
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:
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:
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.
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.
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.
For more resources on running your business, from conducting a business health check to hiring employees, explore the support guides and templates below.
Are you starting your own business? Let us know how you get on in the comments.
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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
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