Choose your business structure

Decide between sole trader, partnership, or limited company - this affects your taxes and legal responsibilities.

Understanding business structures

Your choice of structure affects everything from how you pay tax to your personal liability. Here's what you need to know.

Sole trader: Simplest to set up. You keep all profits but are personally liable for debts.
Partnership: Share responsibilities and profits. Partners share liability for business debts.
Limited company: Separate legal entity. Personal liability limited to investment, but more admin.
LLP: Partnership with limited liability. Must file accounts at Companies House.

Business structure affects tax liability, personal liability, and required paperwork. Professional advice is recommended when choosing the right structure.

Register with HMRC

Register for the taxes that apply to your structure when you start trading. A new limited company is usually set up for Corporation Tax when it registers with Companies House.

Getting started with taxes

As a new business owner, registering with HMRC is one of your first priorities. The steps depend on your business structure.

Self Assessment (sole traders and partners): Tell HMRC by 5 October after the end of your first tax year
Corporation Tax (limited companies): Add Corporation Tax services when the company starts to do business, and notify HMRC within 3 months of that date
VAT: Register when taxable turnover goes over £90,000 in 12 months, within 30 days of the end of that month
PAYE (employers): Register before the first payday
CIS (construction): Register before taking on your first subcontractor

gov.uk

Write a business plan (opens in a new tab)

Map out your business idea - essential for securing funding and staying focused.

What makes a good business plan

A business plan helps you think through your idea and is often required when applying for funding or loans.

1. Executive Summary: Maximum 1,000 words (2 pages). Written last but appears first. Summarises business concept, opportunity, and funding needs.
2. Personal Summary: Your background, skills, qualifications, experience. Why you're the right person.
3. Business Concept: What your business does, problem solved, target customers, business structure.
4. Products and Services: Features, benefits, unique selling points, pricing strategy, intellectual property.
5. Market Analysis: Market size, growth trends, customer demographics, buying behaviours.
6. Competitive Analysis: Direct and indirect competitors, strengths, weaknesses, your competitive advantage.

Choosing the right business insurance

Start with the insurance the law requires: if you employ anyone, you must have employers' liability insurance with at least £5 million cover, and business vehicles need motor insurance.

Insurance essentials for new businesses

The right insurance protects you, your employees, and your customers. Some types are legally required.

The insurance your business needs depends on what it does. Some types are required by law. Some are required by professional regulators. The rest are not required by law, but you may still need them for contracts or to protect your business. Each type below starts with its legal status, so you can see which group it is in.

Employers' Liability: Required by law if you employ anyone, with at least £5 million of cover. Covers claims from employees injured or made ill at work.
Motor Insurance: Required by law for any vehicle used for business on roads or in other public places. Driving uninsured is a criminal offence. Covers claims from accidents in vehicles used for work.
Professional Indemnity: Required by some professional regulators, for example for many solicitors, financial advisers and architects. Covers claims of negligent advice.
Public Liability: Not required by law, but clients and landlords often require it in contracts. Covers claims for injury to other people or damage to their property.
Products Liability: Not required by law, but essential if you make or sell goods. Covers claims from defective products.
Business Contents: Not required by law, but recommended if you have equipment or stock. Covers business assets against theft, fire and damage.
Business Interruption: Not required by law, but recommended if a fire or flood would stop you trading. Covers lost income when you cannot trade.
Cyber Insurance: Not required by law, but recommended if you hold personal data or rely on IT. Covers data breaches, ransomware and regulatory fines where insurable.
Key Person: Not required by law, but worth considering if your business depends on a few people. Covers the business if one of them dies or is incapacitated.

Choosing the right cover

Do you employ anyone? Employers' Liability is required by law
Do you use vehicles for work? Business motor insurance is required by law for use on roads or in other public places
Are you in a regulated profession? Check whether your professional regulator requires Professional Indemnity, and how much
Do you deal with customers or visit other premises? Public Liability is not required by law, but clients and landlords often require it
Do you make or sell physical products? Products Liability is not required by law, but essential

Explore funding options

Grants, loans, and other funding to help your business grow.

Finding the right funding

There are many options for funding your new business, from government-backed loans to grants for specific sectors.

Start Up Loans: £500-£25,000 at a fixed 7.5% a year, repaid over 1 to 5 years. Includes up to 12 months of free mentoring.
Growth Guarantee Scheme: Government-backed loans up to £2 million for established businesses.
Grants: Not repayable but competitive. Check regional and sector-specific schemes.
British Business Bank: Helps connect smaller businesses with finance providers.

Finance and support for your business (opens in a new tab)

ico.org.uk

Protect your data (opens in a new tab)

GDPR compliance is required from day one if you handle customer data.

Data protection basics

If you collect any customer information, you need to comply with data protection law. Here are the essentials.

The UK GDPR (UK General Data Protection Regulation) and Data Protection Act 2018 govern how organisations process personal data.

Key principles:

Lawfulness, fairness, transparency - process lawfully and openly
Purpose limitation - collect for specified purposes only
Data minimisation - collect only what's necessary
Accuracy - keep data accurate and up to date
Storage limitation - don't keep longer than needed
Integrity and confidentiality - keep data secure
Accountability - demonstrate compliance

The Information Commission (formerly the ICO) is the UK's data protection regulator.

Start a business

Choose your business structure

Register with HMRC

Write a business plan (opens in a new tab)

Choosing the right business insurance

Explore funding options

Protect your data (opens in a new tab)

Next steps

Form a business partnership

Self Assessment for landlords

Insuring your new business

Related journeys

Start a tech business

Set up a limited company

Become a sole trader

Start a restaurant