How to start a business

Want to start a business? You’re not alone. Around 832,000 new companies were set up in the UK in 2025, according to the NatWest and Beauhurst New Startup Index—part of a wave of activity that has pushed the total number of active companies to a record 5.66 million.

If you want to join their numbers, you’ve come to the right place.

Here’s what we cover in this article:

Starting steps

Planning for a new business is one of the most important stages if you want to succeed–especially with rising costs and a competitive market to navigate.

But don’t procrastinate.

Take your business idea to market, test it and iterate it if necessary, as that’s a great way to see if people are interested in what you are selling to them.

So, whether you’re starting your business because of a personal passion, a gap in the market or simply because you want to work for yourself, get ready to take the first steps towards making it a reality—read on for some useful advice as you begin your exciting journey of starting and running your own business.

The basics of starting a new business

Before you dive in, it’s worth getting your ducks in a row first. By doing that, you will give your business a fighting chance of succeeding.

When starting a new business, you’ll need to register with HMRC. Most companies set up as a sole trader, partnership, or limited company.

Choose a name for your business, but check with Companies House and on Google to see if it’s not already in use. If you use a name that’s the same as another business, you could get in trouble over trademark issues, or for “passing off”—a situation where it can be implied (even if it’s unintentional) that you’re attempting to benefit from another business’ reputation.

Once you’ve got a name, it’s not a bad idea to buy the website domain name for your company, and to register accounts on social media. Even better, this is another way in which you’ll typically discover if there’s another entity with the same or a similar name.

You’ll need to put a system in place so you can manage your cash flow, costs, and tax payments once you start trading. Using accounting software can help your business stay in check and keep you on top of your finances. Unsurprisingly, Sage has everything you could ever need, including Sole Trader Free—which as its name suggests, costs nothing!

It’s also worth finding an accountant, who will help you stay on top of your tax requirements and other financial elements. Accountants also hand out business advice, which can be a game changer. After all, they spend all day talking to business owners. They’ve seen it all, and are always happy to share because your success is ultimately their success, too. (Tip: Take a look at the Sage Accountant and Bookkeeper Directory.)

If raising finance is a requirement for your business—or even if it isn’t—you’ll need to create a business plan. This living document will help you with your planning and keep your business focused as you work to build it. More on that below.

Legalities you need to know about starting a business

If you set up as a limited company, there’s now an extra step to be aware of.

Since 18 November 2025, all company directors and people with significant control must verify their identity with Companies House under the Economic Crime and Corporate Transparency Act. For a brand-new company, you’ll complete this as part of incorporation, so it’s worth factoring in before you file.

Another thing to bear in mind is that, these days, software isn’t just a convenience.

For many businesses it’s a legal requirement.

Under Making Tax Digital (MTD), VAT-registered businesses already keep digital records using MTD-ready software, and file their returns using the software.

Since April 2026, the same approach has applied to income tax for self-employed people and landlords with qualifying income over £50,000, dropping to £30,000 from April 2027 (and £20,000 in April 2028).

In practice, that means submitting quarterly updates through MTD-compatible software, and then submitting a digital tax return using the software—rather than facing a once-a-year scramble with spreadsheets. So, it pays to choose the right tool from day one.

It’s worth keeping an eye on your turnover: once it exceeds the VAT registration threshold (£90,000 as of 2026), you’ll need to register for VAT within 30 days. This is definitely something to discuss with an accountant if you’re getting anywhere near that level, because the timing can be problematic. You could be left out of pocket if you’re not charging VAT on your invoices.

Expert advice on planning a business

Working with experts when planning a business can help you to get off on the right footing.

As previously highlighted, an accountant can assist you with your tax affairs and a bookkeeper can help you manage your books, leaving you to focus on building and growing your business.

When deciding on the right legal structure for your business, it’s worth seeking advice from a solicitor or an accountant.

For some businesses, this might be a straightforward option.

However, if you have plans to trade in numerous countries, you will have international tax and legal issues to consider, making things more complex. Don’t rush into making a decision. Do your research, seek advice, then put your plans into play.

Expert advice can also come in the form of getting help when it comes to creating important documents such as a business plan—see below for more details on why having one can really help your business.

How do you find a winning business idea?

Finding the perfect idea can be a tricky affair.

For some people, it can be as simple as turning a passion, hobby or skill set—such as fitness, baking or social media management—into a business idea. Some people might be trained by their employer and realise they can take those skills into a new business.

For others, though, the desire might be there to create a business but pinning down an idea is a bit harder.

One way to come up with a business idea is to study growing trends.

Assess current business trends, read industry-specific research, talk to friends and family, see what’s happening in the news, and speak to people working in the industry you want to start up in.

AI chatbots can speed up that research too—helping you summarise market reports, test ideas and spot gaps—though they work best alongside real conversations with potential customers, not instead of them.

For your business to flourish, you’ll need to come up with an idea that solves a problem, has a unique selling point and is something people are willing to pay for. Without that, your company won’t last very long. And remember, a great business idea isn’t enough to succeed—you need to back it up with planning, application, dedication, and hard work.

How to write a great business plan

If you want to give your business a fighting chance of succeeding, it helps to have a business plan in place.

By creating a business plan, you will have a practical framework that will guide your hard work, enthusiasm and skills, and keep you focused.

You will use the document to map out your company’s strategic goals, strengths and weaknesses, purpose, and unique selling point. It will also help you to achieve clarity on the market you want to sell to and the companies you will be competing against.

By using your business plan to create milestones for your company, you can set targets that will keep you moving in your bid to build and grow your firm.

Another tool that can assist you is a Business Model Canvas—a one-page business plan that can help your company simplify its planning in a way that is highly visual.

For step-by-step guidance, read our guide to creating business plans and develop a document that will help you to stay on top of things.

Starting different business types

Want to create a business but need advice that’s tailored to your target market? We’ve created a series of industry-specific articles that will help and save you time.

Food and drink businesses

Got designs on opening a restaurant, running a coffee shop, starting a food truck or selling your products in a supermarket? The food and drink industry is a competitive one, so having your planning in place will help.

Here are just some of the articles we have on Sage Advice that can help:

Online and ecommerce businesses

Planning on selling goods online? It’s tempting to dive right in, as you don’t have to worry about purchasing commercial real estate—but you still have to consider how you’ll deliver your products and services to your customers. Then you must determine how you’ll be selling your goods, how you’ll market your business and what your online shopfront will look like—i.e. your website.

Here aresome articles we have here at Sage Advice that you can take a look at:

Shops and retail businesses

Do you have ambitions of owning your own shop—a proper bricks-and-mortar option? Owning a physical space to sell your goods will have its challenges, notably property purchase or rental costs and finding the right location, among other things, so it’s in your best interest to be prepared.

Here’s some of our articles that can point you in the right direction:

Professional services businesses

So, you’ve worked for a design agency for years and you’re ready to go it alone? Perhaps you want to open your own cleaning business or maybe you want to run your own consulting firm. No matter what type of professional services company you want to run, here’s some advice:

Final thoughts: Ready to start a business?

There are lots of steps to take when starting your business, but by taking your time and putting the right planning in place, you will make things easier.

Remember, take advantage of expert advice when you need it, and think about how you can meet the needs of your customers and clients with your products and services.

And don’t forget about your finances – make sure you keep on top of your cash flow if you want your business to succeed.

This article was first published in April 2018, and has been updated several times since for relevance.

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