Starting a business in the UK comes down to six steps: decide what you'll sell and who to, check the numbers work, choose a legal structure, register, sort insurance and a bank account, and win your first customers. None of it needs permission or a qualification, and as a sole trader you can be legally trading within days. The expensive mistakes happen in the steps people skip — the numbers and the customers — so this guide spends its time there.
At a glance
| Feature | Detail |
|---|---|
| The six steps | Decide what you sell, check the numbers, choose a structure, register, sort the essentials, win customers |
| How fast you can start | Sole trader: days. Limited company: usually a day or two once you file |
| What it costs to register | Sole trader: free. Limited company: £100 online at Companies House |
| Do you need money to start | Not always — many service businesses start for a few hundred pounds |
| The step people skip | Checking the numbers before spending anything. Skip it and you find out the hard way |
| Where the customers come from | Mostly local search and word of mouth at first — not ads |
Step 1 — Decide what you'll sell, and who to
Every business is an answer to the same sentence: we help [these people] to [get this result] by [doing this]. Fill that in honestly and you have made the three biggest decisions already — the customer, the product and the reason anyone would pick you.
Be specific about the customer. "Busy families within twenty minutes of your town" is a customer you can find, price for and advertise to. "Anyone who needs cleaning" is not. Specific does not mean small — it means findable.
If you have the itch but not the idea, that is a normal starting point, and worth taking slowly: the best first businesses tend to sell something people already buy, in a place where the existing options are slow, unreliable or hard to book.
Step 2 — Check the numbers before you spend anything
This is the step that separates businesses that last from businesses that surprise their owners, and it takes an evening.
Three numbers, in order. What will you charge? Look at what the established local competition charges and position yourself deliberately — new businesses almost always price too low, which is far harder to fix later than pricing too high. What does each sale cost you? Materials, delivery, fuel, card fees — the costs that only happen because the sale happened. What's left is your margin. How many sales a month do you need? Take the bills you have to cover — including paying yourself — and divide by that margin. That number of sales, every month, is what the business actually has to do.
If that number makes you wince — forty jobs a week when you can physically do twenty — the business needs a different price or a different shape, and you have just found that out for free. Writing these three numbers down properly is the start of a business plan, and it is the single highest-value hour of the whole process.
Step 3 — Choose your legal structure
For most people this is a two-horse race.
Sole trader is the simple start: you are the business, you register with HMRC, you keep records and file a Self Assessment tax return. Quick, free, and you can switch later — a very common path is to start as a sole trader and go limited once the profits justify it.
Limited company makes the business a separate legal thing from you. Your personal money is protected if the business fails, some customers and contracts expect it, and at higher profits it can be more tax-efficient — in exchange for more admin and public filings at Companies House.
There is no universally right answer; there is a right answer for your situation. Our guide to choosing a business structure compares them properly, including partnerships and CICs.
Step 4 — Register
Sole trader: register for Self Assessment with HMRC. It is free and takes minutes online. Worth knowing: below £1,000 of annual trading income HMRC's trading allowance means you may not need to register at all — but if you're building a real business you will pass it quickly, so register early.
Limited company: you incorporate at Companies House — choose an available name, at least one director, a registered address, and pay the £100 online filing fee. Most incorporations complete within a day or two. There are also formation agents who bundle the registration with extras. The full walkthrough is in our guide to registering a company.
Either way, registration is the easy step. Do not mistake having a registered business for having a business — that comes in step six.
Step 5 — Sort the essentials
Three things, none glamorous, all cheaper to do now than to untangle later.
A separate bank account. Legally required for a limited company, and strongly worth it as a sole trader — mixing business and personal money turns every tax return into archaeology.
Insurance. Public liability if you set foot on other people's property or they set foot on yours; professional indemnity if you sell advice or your work could cost a client money; employers' liability is a legal requirement the moment you take on staff.
A way of keeping records. From day one, every sale and every cost. A simple spreadsheet is fine to start; the habit matters more than the tool.
Step 6 — Win your first customers
The step everything else exists for, and the one worth the most thought.
For most local and service businesses the first customers come from three places: people who already know you (tell everyone — genuinely everyone), local search, and early word of mouth. Local search deserves particular attention: when someone types "[your trade] near me", a free Google Business Profile with a handful of real reviews will do more for you in month one than paid advertising, because you are being found at the exact moment someone wants to buy.
Paid ads have their place — but they punish guesswork. Until you know what a customer is worth to you, you cannot know what you can afford to pay to win one. Want help getting customers? Our sister agency The Fractions runs ads and builds websites for small UK businesses — the pages, the ads and the enquiries behind them.
Starting a specific type of business
The six steps are the same everywhere, but the details — licences, kit, pricing, where customers come from — are different in every trade. We have specific guides for the most common ones:
- Cleaning — the most-started UK business, and one of the cheapest to begin.
- Driving instructor — the ADI qualification, the car, and what you can earn.
- Food and drink — registration, hygiene ratings and selling from home.
- Tutoring — qualifications, DBS checks and finding pupils.
- Childminding — Ofsted registration and what it takes.
- Plumbing — qualifications, tools and going out on your own.
- Dog grooming and dog walking — low start-up costs, local demand.
- Photography — turning a skill into paid work.
- Ecommerce and dropshipping — selling online without holding stock.
- Clothing — starting a label or a print-on-demand line.
- Property — lettings, deals and doing it through a company.
- Courier and delivery — the van, the platforms and the sums.
More guides: crafts, beauty and hair, hairdressing, barbershops, care, consulting, construction, trades, electricians, fitness, bookkeeping, taxi, window cleaning, food trucks, cafes and restaurants, landscaping, retail shops, IT support, marketing agencies, recruitment, security, events and weddings, pet services, cars and automotive, car valeting, vending machines, waste clearance, farming and a side business alongside a job.
What this looks like in practice
Take Jamie, a plumber in Reading who spent twelve years working for someone else and is going out on his own. His version of the six steps: he fixes emergencies for homeowners who can't wait until Tuesday — that's step one, and being the reliable one who answers the phone at 11pm is the reason people will pick him. He plans to charge £70 an hour and reckons on 25 chargeable hours in a good week, which after the van, fuel, insurance and materials leaves enough to beat his old salary — that evening of arithmetic was step two. He starts as a sole trader (step three), registers with HMRC in an afternoon (step four), opens a business account and takes out public liability cover (step five), and puts his first fortnight into a Google Business Profile, his old firm's overflow work, and telling every letting agent in town that he answers at night (step six).
Nothing in that story needed a consultant. It needed decisions in the right order and one honest evening with the numbers.
Create a mini business plan in minutes with Plan.business. Put in your rate, your hours and your costs, and it works out the rest — what you will make, when you break even, and what you need to charge to hit your target.
Figures correct as of September 2026. Tax thresholds, fees and rates change; check the linked GOV.UK pages before acting. Prices and costs shown are indicative and vary by area and by what's included.
What is Plan?
Plan is a free business operating system for people starting or newly running a UK business. It walks you, one simple step at a time, from your elevator pitch through brand, product and pricing, to a complete business plan — then uses everything it now knows about the business to help with the basics: logo and brand, marketing, a website, a bank account, funding, insurance, company registration. You can use as much or as little as you want.
Frequently asked questions
How much does it cost to start a business in the UK? Registering costs almost nothing — free as a sole trader, a small filing fee for a limited company. The real costs are your trade's kit, insurance and early marketing, which range from a few hundred pounds for a service business run from home to much more where vehicles or premises are involved.
Can I start a business with no money? You can start several kinds of business with very little — services like cleaning, tutoring or dog walking need insurance and basic kit rather than capital. What no-money starts really spend is time: your marketing is legwork and word of mouth rather than ads. Be wary of anything promising a no-money business that pays quickly.
How long does it take to start a business? The legal part is fast: days as a sole trader, and usually a day or two for a limited company once you file. Getting ready to trade well — pricing, insurance, a way to be found — sensibly takes a few weeks. It is the first customers, not the paperwork, that set the real timeline.
Do I need to register my business straight away? As a sole trader you must register with HMRC once you're earning beyond the £1,000 trading allowance, and by 5 October after the end of the tax year you started in. In practice, register when you start trading seriously — it is free, quick, and removes a deadline you would otherwise have to remember.
Should I be a sole trader or a limited company? Start from your situation: sole trader is simpler and cheaper to run, a limited company protects your personal money and can be more tax-efficient at higher profits. Many people start as sole traders and incorporate later. Our business structures guide compares them in detail.
Can I start a business while still employed? Usually, yes — many businesses start as evenings-and-weekends alongside a job, which takes the financial pressure off the early months. Check your employment contract for anything about competing businesses or use of your time, and remember the income still needs declaring to HMRC once you pass the trading allowance.
Two ways to do this
Do it yourself, free. Plan walks you through the six steps above one short question at a time — what you sell, what to charge, the structure, the plan — and does all the sums for you. It runs in your browser, nothing to download. Do just the step you're stuck on, or the whole journey; both are fine.
Or go straight to your trade. If you already know what you're starting, the sector guides above cover the licences, costs and first customers for your specific business — each one links to the exact help it needs.