A step-by-step guide to setting up a business in the UK

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It’s finally time to set up that business you’ve been dreaming about for years. Congratulations!

But don’t get too excited just yet. There are a number of things you need to consider before you can start trading. These may vary depending on your industry and the legal form you are choosing for your business. This step-by-step guide will take you through all the necessary steps involved in setting up a new UK company from choosing the right name for your business to opening a bank account.

Step 1 — Choose a name for your business

When choosing a name for your business, make sure it:

  • is easy to spell and pronounce;

  • is memorable and makes sense;

  • is not too long (maximum of 15 characters);

  • does not mislead people into thinking they are buying something else (e.g. if you’re selling cakes, make sure your name doesn’t sound like an insurance company);

  • does not infringe on anyone else’s trademark or copyright.

You can check whether the name you’ve chosen is available on Companies House’s website by searching for it in their database. You can also use an automated naming tool such as www.NameLix.com or  Squadhelp to generate lots of possible names based on certain criteria such as length, syllable number etc., which may spark some inspiration!

Step 2 — Decide on your legal form

The first step in setting up your business is to decide on your legal form. There are four main business legal forms in the UK for small businesses: sole trader, partnership, limited liability partnership and limited company. Each has its own benefits and drawbacks, so it’s important to choose the right one for your business.

Sole traders are the simplest and most common type of business in the UK. They’re easy to set up and you have complete control over your business. However, sole traders have unlimited liability, which means that they are also personally liable for all debts and losses, so it’s important to be aware of the risks before you start.

Partnerships are similar to sole traders, but with two or more people involved. All partners have unlimited liability and are personally liable for the debts and losses of the business.

Limited liability partnerships (LLPs) are a hybrid of partnership businesses and companies. LLPs have the flexibility of a partnership, but with the limited liability of a company. This means that each partner is only liable for the amount of money they have invested in the business and for any personal guarantees they have given to raise finance. Unlike sole traders and limited partnerships, LLPs have to file their accounts or make their accounts public.

Limited companies are a very common legal form of business in the UK. Limited companies are separate legal entities from their owners, meaning that the owners are not personally liable for the debts and losses of the business and the company can sue or be sued in its own name. Limited companies also have to follow stricter rules and regulations than sole traders or partnerships such as filing accounts and making their accounts public.

Step 3 — Choose a registered address (and get it checked!)

When you register your business, you’ll need to choose a registered address. This is the address that will be listed on public records and where you’ll receive official correspondence from HMRC and other organisations.

You can choose a registered address outside of your business premises, but it must be a permanent address and accessible for the public to visit. If you are using a personal address, you need to check if you have the right to use it for business purposes.

There are a few different options available in the market for registered addresses, including using your work premises address or signing up for corporate service.

If you’re looking for office space, you can search on www.RightMove.co.uk or check out high street providers like WeWork or Regus.

Or, you can use a corporate service like operviser that provides virtual addresses in London and around the UK.

Step 4 — Register for self-assessment with HMRC or register your LTD or LLP with Companies House

Sole traders and partners of unlimited partnerships must all be registered for self-assessment with HMRC, whereas, Limited Partnerships and Limited Companies must be registered as legal entities with Companies House. In this paragraph, we will cover the procedure to register yourself or your unlimited partnership for self-assessment or your business with Companies House.

Step 4a. Register yourself or your partnership for self-assessment with HMRC

If you start working for yourself as a sole trader or a member of an unlimited partnership, you will need to inform Her Majesty Revenue & Customs (HMRC) by the 5th of October in your business’s second tax year. In a partnership, one of the members should be appointed as a ‘nominated partner’ to register the partnership with HMRC.

Information on the registration process could be found on the government’s website:

Step 4b. Incorporate your LLP or LTD

1. Appoint designated members, directors, shareholders, company secretaries and PSCs

The first step of setting up a business with Companies House is appointing designated members, directors, shareholders, PSCs and company secretaries depending on the legal form of the business.

For LLPs, you only need to appoint designated members. Designated members perform certain duties in relation to the legal administration of an LLP that would, for a company, be performed by the secretary or directors. ‘If there are no designated members, then all members are deemed to be designated.

For LTDs, you will need to appoint Directors, Shareholders and Secretaries

· Directors are responsible for the overall running of your company and ensuring it meets legal requirements. They also represent your company when dealing with third parties, such as customers or suppliers. They can be individuals or companies registered in the UK and should be at least 18 years old;

· Shareholders own shares in your business and have an interest in its success by making a profit from investment returns on their shares or dividends paid out by the business (after all other costs have been deducted). There must be at least one shareholder who owns at least one share in each class issued by the company. You can act as both director and shareholder;

· There is no legal requirement to appoint a company’s secretary, but some companies appoint them to take on some of the director’s responsibilities.

Since 2016, Companies House has introduced PSCs to ‘improve corporate behaviour, deter money laundering and help to sanction those hiding their ownership or control for the purpose of facilitating illegal activities. A Person of Significant Control (PSC) or often referred to as a ‘beneficial owner’ is someone owning or controlling your company. LTDs, as well as LLPs, are required to identify PSCs.

2. Format the documents of incorporation

If you opted for an LLP, you will have to draft an LLP agreement that says how the LLP will be run.

LTDs are governed by the articles of association and the memorandum of incorporation:

– The articles of association are the basic rules you will have to follow when running your UK business. It is important that these are clearly stated and agreed upon by all parties involved in starting the company, including shareholders and directors;

– The memorandum of incorporation confirms that the subscribers wish to form a company under the Companies Act and agree to become the first members of the company.

If you are looking to run a simple LTD, you may use the templates provided by the government https://www.gov.uk/guidance/model-articles-of-association-for-limited-companies

If you are looking to implement a more complex LLP agreement or articles of association, get in touch with us and we will put you in touch with the right solicitor.

3. Issue share capital and pay-in

The next step for the LTD is to issue a share capital and pay in. This is the money that you put into your business, which will determine the value of your company. It is also known as “shareholders’ funds” or “shareholder’s capital”.

In the UK, LTDs don’t need to pay in their share capital before they can start trading — however if the capital has not been fully paid in and the company goes into liquidation, shareholders would have to pay an amount owed for their shares in full (as well as other debts).

4. File your documents at Companies House

Companies House is the official register of companies in the UK. It is a government body, part of HM Treasury, and has been in operation since 1844.

Companies House provides a number of services to help you set up your business as quickly and easily as possible. These include:

· online company registration services that allow you to incorporate your company or file documents with them;

· a wide range of online services for businesses which enables you to manage your company online.

For more information on how to register your company:


For more information on how to register your LLP:

Step 5. Open a business bank account

As soon as you have decided to set up your business in the UK, you need to open a bank account. The type of bank account you choose will depend on your business needs. You’ll also need to make sure that it’s possible for non-UK resident directors or shareholders to access the account — these can include:

· the type of account available (e.g., current account);

· whether the person has lived in the UK for six months or more and whether they have a permanent address here.

Many banks will offer different types of accounts depending on how much money is being deposited and withdrawn each month; this could affect what sort of service they provide when it comes time for accessing funds electronically through an ATM machine, making payments etcetera!

Step 6. Obtain phone numbers for the company and its directors

You should also have a phone number for the company and each director. The number can be a mobile or landline, but you will need one for each. You can use a virtual phone number service, which provides you with an alternate line that forwards to any other phone (including your own). This is ideal if you want to keep some of your personal details private from those that call. Phone services vary in price and quality: some offer higher-quality connections with fewer dropped calls or call time restrictions; others may offer cheaper rates per minute or bulk discounts when making international calls — it’s best to shop around until finding something that suits your needs best! Bear in mind there are some providers such as GiffGaff offering plans with no minimum contract term, which allows you to pay only for the services you need.

Step 7. Arrange insurance (including public liability insurance)

Arranging insurance is a legal requirement for most businesses, but it is also an important way of protecting yourself and your assets against unforeseen risks. Depending on the nature of your business, you may need to arrange public liability insurance or even professional indemnity cover.

Public liability insurance provides cover in the event that someone suffers injury or damage as a result of something owned by you (or belonging to your premises) being used outside your control and causing harm to other people or property.

Not all businesses need public liability insurance: some industries have their own specific regulations around this issue which may mean that certain types of businesses are already covered for such incidents by their trade association or industry body. In addition, if you have private medical healthcare facilities like physiotherapy clinics within your location then these will probably already be insured through private medical indemnity schemes anyway — so check with them before assuming this isn’t necessary!

Public liability insurance can be expensive and tricky to arrange — especially when starting out as a new business owner — so make sure that you shop around thoroughly before signing up with any one provider; there are many different policies available, out there with varying levels and types of cover depending on how much protection they offer at different premiums (and some providers might even offer discounts if multiple policies are taken out together).

Step 8. Register for VAT, PAYE and relevant licences and comply with any industry regulations (if applicable)


You’ll need to register for VAT if your total VAT taxable revenue is over £85,000 in one year. If this applies to you, read the guide on registering for VAT provided by HMRC: https://www.gov.uk/register-for-vat


Pay As You Earn (PAYE) is an employer’s duty to deduct income tax from their employees’ pay packets at source and pay this directly over to HMRC.

If any of your employees earn over £123 per week, then they should be paying tax through Pay As You Earn (PAYE).

Industry Regulations

There are certain professions that are regulated in the UK. This means that there is a legal requirement to have certain qualifications or experience (or meet an alternative condition or requirement) in order to undertake certain professional activities or use a protected title. The Department for Business, Energy and Industrial Strategy has published a list of regulated professions. This list is available online: https://www.gov.uk/government/publications/professions-regulated-by-law-in-the-uk-and-their-regulators/uk-regulated-professions-and-their-regulators

Step 9. Register intellectual property (if applicable)

You may claim a right to ownership for some forms of IP such as a trade mark, design or patent. To do so, you need to submit a formal application to the Intellectual Property Office (IPO).

An application to register a trademark would cost at least GBP 200, whereas an application for a patent GBP 310.

Most companies would contact solicitors or an agency specialised in patent registration to assist them with the application.

So there you have it! A comprehensive guide to starting a business in the UK. If you follow these steps, you’ll be on your way to entrepreneurship success in no time. Of course, this is just a general overview and there may be other specific requirements depending on your industry — so always do your research beforehand. We wish you all the best as you embark on this exciting journey!

Remember that there are many resources available online that can help you along the way — including our own blog!

Did you know that operviser can help you step up your business in the UK? For more information, please contact our team at contact@operviser.com 

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