Pre-trading compliance checklist

Guide summary

Use this checklist before your first day of trading to make sure you have completed all legal requirements. Register with HMRC, check if you need insurance, and get any licences or permits your business needs.

Choose your business structure: sole trader, limited company, partnership or LLP
Register with Companies House if you set up a limited company or LLP
Register for self-assessment with HMRC within 3 months of starting
Register for corporation tax within 3 months if you are a limited company
Pay the ICO data protection fee before trading if you handle personal data
Register for PAYE before your first payday if you hire staff
Check if you need VAT registration when turnover exceeds £90,000
Set up a workplace pension if you employ eligible staff
Get employers’ liability insurance if you hire anyone – fine from £2,500 per day
Check if you need a licence or permit on GOV.UK Licence Finder

Use this checklist before your first day of trading to confirm you have met all mandatory requirements. Work through each section and resolve any gaps before you begin.

Business structure

Business structure chosen (sole trader, limited company, partnership, or LLP)
Registered with Companies House (if limited company or LLP)
Received company registration number and certificate of incorporation (if applicable)
Persons with significant control (PSC) register completed (if limited company)

Universal registrations every business needs

The mandatory registrations every UK business must complete regardless of sector — HMRC, Companies House (if limited), ICO data protection fee, and pension auto-enrolment (if employing).

Every UK business must complete certain registrations before trading, regardless of sector or size. The exact registrations depend on your business structure.

HMRC self-assessment: Mandatory for sole traders and partners. Register within 3 months of starting to trade (5 October deadline for first tax return year).
Corporation tax: Mandatory for limited companies. Register with HMRC within 3 months of starting to trade.
Companies House incorporation: Mandatory for limited companies and LLPs. Must incorporate before trading as a limited company. Online filing from GBP 100 (GBP 156 same-day).
ICO data protection fee: Mandatory for most businesses processing personal data. Three tiers from GBP 40 to GBP 2,900 per year depending on turnover and staff numbers.
PAYE registration: Mandatory if employing staff. Register before first payday. Applies to all employers regardless of structure.
VAT registration: Mandatory when taxable turnover exceeds GBP 90,000 in any 12-month period (2024-25 threshold). Voluntary registration available below threshold.
Pension auto-enrolment: Mandatory from day one of employing eligible staff (aged 22-66, earning over GBP 10,000/year). Must set up a qualifying pension scheme.

Sole traders need HMRC self-assessment, ICO fee, and (if employing) PAYE and auto-enrolment. Limited companies need all of these plus Companies House incorporation and corporation tax registration.

Tax registration

Registered for self-assessment with HMRC (sole traders and partners)
Registered for corporation tax with HMRC (limited companies — within 3 months of starting to trade)
Registered as employer for PAYE (if hiring staff — before first payday)
Checked whether VAT registration is required (taxable turnover approaching or exceeding threshold)
Unique Taxpayer Reference (UTR) received

Data protection and insurance

ICO data protection fee paid (or exemption confirmed)
Employers' liability insurance arranged (if hiring anyone)
Motor insurance covers business use (if using vehicles for business)
Professional indemnity insurance arranged (if required by professional body)
EL certificate displayed where employees can access it

Legally required business insurance

Mandatory insurance requirements for UK businesses with penalties for non-compliance.

UK law requires certain types of insurance depending on your business activities. Failing to have the correct insurance can result in fines, prosecution, and inability to claim compensation.

Employers' Liability Insurance - Requirement: Mandatory if you employ anyone (including part-time, casual, and family members working for you)
Employers' Liability Insurance - Minimum cover: £5 million (though most policies provide £10 million)
Employers' Liability Insurance - Penalty for no insurance: £2,500 fine for every day without cover
Employers' Liability Insurance - Display requirement: Must display certificate or make available to employees, or face £1,000 fine
Employers' Liability Insurance - Certificate retention: Retaining certificates for 40 years is recommended best practice (but no longer legally required since October 2008) as claims for occupational diseases can be made decades after exposure
Motor Insurance - Requirement: Mandatory for any vehicle used for business purposes (company car, deliveries, client visits)
Motor Insurance - Minimum cover: Third party liability (personal car insurance may not cover business use)
Motor Insurance - Penalty: Criminal offence with unlimited fine, 6-8 penalty points, possible disqualification, and vehicle seizure
Professional Indemnity - Requirement: Mandatory for some regulated professions (solicitors, financial advisers, architects, accountants, healthcare)
Professional Indemnity - Minimum cover: Varies by regulator (e.g., £2-3m for solicitors per SRA requirements, €1.25m per claim for FCA-regulated financial advisers converted to sterling, £250k for architects)
Professional Indemnity - Penalty: Regulatory action, removal from professional register, FCA enforcement (financial services)

Exemptions and special cases

Employers' Liability exemptions:

Family businesses where all employees are close relatives
Employees working outside Great Britain for more than 14 consecutive days
Some companies with one employee who owns 50% or more of the share capital

Important: Even if exempt, you may still want cover as you could be liable for employee injuries.

Employers' liability insurance (opens in a new tab)

Sources:

Employers' Liability (Compulsory Insurance) Act 1969
Health and Safety Executive (HSE) guidance
Road Traffic Act 1988
Financial Conduct Authority (FCA) requirements
Professional regulatory bodies (SRA, ARB, etc.)

Licences and permits

Checked GOV.UK Licence Finder for activity-specific requirements
Premises licence applied for (if selling alcohol, providing entertainment, or serving late-night refreshment)
Food business registered with local authority (if handling food — at least 28 days before trading)
Waste carrier registration obtained (if transporting waste)
Professional or sector-specific registration completed (if in a regulated sector)
Health and safety notification submitted to HSE (if required for your activity)

Premises

Planning permission confirmed for intended business use (or permitted development rights checked)
Business rates registration completed with local authority (if occupying commercial premises)
Building regulations sign-off obtained for any alterations
Fire risk assessment completed and documented

Planning your timeline

If you have gaps to fill, use our pre-trading timeline to understand how long each application takes and when to submit it.

Pre-trading timeline: what to do when

Month-by-month timeline from 3 months before trading to trading day, sequencing registrations, applications, and approvals.

Start the approval process early. Some licences take months to process, and trading without them is a criminal offence.

3 months before trading: Apply for premises licence (alcohol, entertainment) — takes 2-3 months. Apply for planning permission if changing use class. Start professional regulator registration (FCA, CQC).
2 months before trading: Incorporate at Companies House (if limited company). Register for corporation tax. Apply for environmental permits. Contact building control if works needed.
1 month before trading: Register food business with local authority (28-day minimum). Register for PAYE (if employing). Set up employer pension scheme. Apply for waste carrier registration.
2 weeks before trading: Arrange employers' liability insurance (mandatory before first employee starts). Arrange public liability and other business insurance. Register with ICO for data protection fee.
Trading day: Display EL insurance certificate. Ensure food hygiene rating visible (Wales mandatory, England/NI voluntary). Begin PAYE reporting from first payday.
Within 3 months of trading: Register for self-assessment (sole trader) or corporation tax (limited company) if not already done. Register for VAT if turnover will exceed threshold.

Tip: Use the GOV.UK Licence Finder to check what additional licences your specific activity and location require. Lead times vary by local authority.

Legal basis

Primary legislation and key regulations

Data Protection Act 2018 Primary 2018 · UK-wide Companies Act 2006 Primary 2006 · UK-wide ELCIA 1969 Primary 1969 · UK-wide Financial Services and Markets Act 2000 Primary 2000 · UK-wide Employers' Liability (Compulsory Insurance) Regulations 1998 SI 1998 · UK-wide

Browse UK legislation legislation.gov.uk

Official guidance

GOV.UK Licence Finder (opens in a new tab)

Identify all licences, permits, and registrations for your business.

GOV.UK

Approvals and registrations you need before trading (opens in a new tab)

Full overview of universal, activity-triggered, and professional pre-trading requirements.

Pre-trading timeline: when to apply for what (opens in a new tab)

Month-by-month countdown to your trading day.

Pre-trading compliance checklist

Business structure

Tax registration

Data protection and insurance

Licences and permits

Premises

Planning your timeline

Legal basis

Official guidance

Related guides in Compliance & Legal

Approvals and registrations you need before trading

Mandatory registrations every business must complete

Farm health and safety essentials

Business insurance: what you need

Mandatory hiring requirements