Are you thinking of setting up a new small business or side hustle in the UK? Want to ditch the day job and become self employed or even run your own company? In this small business start-up checklist we’ll cover some of the things you need to think about before taking the plunge.


1. Come up with a business idea

This is a pretty obvious one but you need to come up with a vaguely viable business idea. Most small businesses fail since they’re simply not profitable. No profit = no business. If it involves significant investment make sure you’ve run your numbers. You don’t want to be stuck with a business that can’t make any money. Obviously there’s safer businesses, such as plumbers and electricians whose skills are always in demand. Then there’s more risky sectors such as restaurants and coffee shops. Do your homework and know your numbers!

2. Before you quit your day job

Are you likely to need a personal loan or mortgage any time soon? Forget about becoming self employed! At least for now. It’s much harder for self employed folks to get mortgages or loans, often needing at least 2 full years of profitable accounts. Make sure your life is in a relatively stable state before quitting that day job!

3. Self employed or limited company?

You need to decide whether you want to run your business as a sole trader on a self-employed basis or alternatively you could set up your own limited company. Most folk will start off by being self employed and perhaps set up a limited company at a later date. However there are good reasons for having your own limited company from the get-go. I’ll continue to assume you’re going down the self-employed route but do consider setting up as a limited company

Business startup checklist - should you set up a limited company?

4. Get some business insurance

Before you do any actual work it’s a good idea to get some business insurance. This will hopefully protect you if things go horribly wrong. Public Liability insurance is generally a good starting point but the insurances will depend on your sector. Again, do your homework and research what sort of insurances your type of business normally has in place.

5. Do work and get paid

Generally speaking you can start working for yourself straight away. You don’t need permission from anyone and you don’t need to inform any authorities (yet!). Do work and get paid. Keep doing this until you’ve made your first £1,000.

Business startup checklist - invoice your customers

6. When do I need to register as self employed?

In the UK you have an annual Trading Allowance of £1,000. Anything you make below that, nobody really cares. However once you’ve passed the £1,000 mark you’ll need to register as self employed with HMRC. Technically speaking there’s no such thing as “registering as self employed”. Instead you need to register for Self Assessment. You have until 5th October of your business’ second tax year to register for Self Assessment and Class 2 national insurance (NI). I would suggest doing this as soon as you know your business is likely to make more than £1,000.

7. Think of a business name

Next on the business startup checklist, while you’re making your first £1,000 you have some homework to do. First thing is to think of a business name. If you’re self employed this can be your own personal name or you can come up with a dedicated fancy name for your business. This doesn’t need to be unique but be careful with trademarks and names used by other businesses. There’s no ‘register’ of business names if you’re self employed. Limited company names must be unique – you can do a search on Companies House.

8. Keep accounting records

Keep all of your receipts. You can store them physically or digitally – up to you. If you only have digital scans / photographs of receipts make sure you have good backups in case things go wrong. Log all of your expenses and income. Completely up to you how you do this. A spreadsheet is a good starting point but at some stage you may find it easier to use some dedicated accounting software.

9. Find a good accountant

Try to arrange an initial meeting with your accountant. Explain your business model (how you plan to make money) and get them to check over everything you’ve done so far. Your accountant will almost certainly save you more in unnecessary tax than they cost.

10. Open a business bank account

It’s not mandatory to have a dedicated business bank account but it makes life a lot easier. There’s loads of options out there now. You should be able to open a new account pretty quickly. Check out my reviews of Tide and Starling.

Open a business bank account

11. Reserve your domain name

Before you make your business name too public it’s a good idea to reserve your domain name. Once it’s gone it’s gone!

12. Build a website

If you’re happy to get your techie hands dirty you can build your own website. Alternatively you can pay someone to do it for you. Almost every business will benefit from having a website.

How to Build a WordPress Website

13. Set up a mailing list

This is often forgotten about. An opt-in e-mail list can be invaluable for communicating with your customers later down the line. The sooner you start gathering their e-mail addresses the better. You can start with a simple spreadsheet but may want to use a dedicated e-mail marketing provider – most are free for the first ~500 e-mail addresses. Watch out for anti-spam and privacy laws! You can’t just bombard customers with marketing junk without their permission and you must make it easy for them to unsubscribe.

14. Set up some terms & conditions of sale

Again often overlooked, the sooner you develop some terms & conditions the better. You need to protect yourself legally. Having accurate, easy to read terms makes sure everyone is singing off the same hymn sheet from day one. Speak to a solicitor who specialises in this service. Worst case have a look at what your competitors are doing… but bear in mind their terms might have been copied from someone else!

15. Trademark your business name

If you’re trading with a particularly unique name and logo it’s worth protecting it so other businesses don’t start using the same name. More importantly you need to check you’re not infringing someone else’s trademark. You can search for a trademark from here.

16. Pay your taxes

If you’re self employed the UK tax year runs from 6th April to the following 5th April. At the end of the tax year you’ve got until the following 31st January to prepare your accounts, submit your Self Assessment tax return and pay any tax due. Remember HMRC don’t care about your shoebox full of receipts (unless you get audited – so keep them safe!). Generally HMRC just want to know:

  • Your business turnover
  • Your business expenses

From this they will know how much profit you’ve made. You pay tax on your profits at the current tax rates (generally 20%). If you set up as a limited company you’ll need to register for corporation tax.

17. Some other things to think about

A few other things to consider. Do you need business premises or a specific trading address? What about staff? Above all, enjoy the ride! Becoming self employed is one of the most exciting decisions you’ll make in your life.

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