If you have an entrepreneurial spirit it’s likely you’ve thought about starting your own business at one time or another. Getting started can feel overwhelming, no matter whether you’re looking to start a small business or dream of starting an international corporation. We take a look at some of the most important considerations you’ll have to make when it comes to starting your business, making it a little easier to achieve your goals.
Written by Grant Longstaff. Published 26 March 2025.
Types of business in the UK
It’s likely, especially at the outset of your business journey, you’ll operate as a sole trader. However, there are other business structures and understanding them is important. It can shape aspects of how a business operates, such as how you pay tax and the legal responsibilities of the company.
Sole Trader
Operating as a sole trader means you're the exclusive owner of the business. This means you’ll make all decisions and keep all of the profits after tax. This structure is often fairly straightforward to establish and offers you complete control. However, it also entails unlimited liability, meaning your personal assets are at risk if the business does incur debts.
Limited Company
A limited company is legally separate from its owners and will be run by a director. This separation provides limited liability protection and can safeguard personal assets. Setting up a limited company involves more regulatory requirements, including registration with Companies House (a government register of companies) and adherence to specific reporting standards.
In the UK, most businesses operate as either sole traders or limited companies, however there are other business structures. There are partnerships – which involve two or more people sharing ownership and the associated responsibilities – and oversees organisations. There are also social enterprises and unincorporated associations, which are those companies which help people and communities, such as charities, Community interest companies (CICs) and voluntary groups.
Gov.uk has a comprehensive breakdown of the differences between sole traders and limited companies which can help you better understand your responsibilities, as well as guidance on other available business structures.
Do I need to register my business with HMRC?
Sole traders can start trading without registering. However, you must register if you earn more than £1,000 in a tax year. Limited company owners need to register the company before they start trading. You're also required to register for Value Added Tax (VAT) if your taxable turnover exceeds the threshold set by the government. It should be noted this guidance comes with caveats and you should always check the latest information on Gov.uk.
Business banking
Choosing to separate personal and business finances is crucial for effective financial management. Opening a dedicated business bank account simplifies accounting, enhances credibility, and ensures your compliance with any legal obligations. Many banks offer business accounts. It’s important you research the accounts on offer and choose an account that meets the needs of your business.
Do I need a business permit or licence for my business?
Specific licenses, permits or certificates may be necessary depending on what it is your business does, but it’s impossible to cover all licence requirements here. The Department for Business and Trade has a licence database which breaks down hundreds of licences into categories and could help you establish those your business will require.
Other considerations when starting a business
Employing staff
You’ll need to have some familiarity with employment law if you’re planning to hire staff. Some of the things you’ll have to consider are contracts, pay, working conditions and hours, and equality and diversity.
Health and safety
Compliance with health and safety regulations is obligatory. You may need to conduct risk assessments and provide specialist training and equipment to employees. Adherence to these regulations not only ensures legal compliance but also helps employee wellbeing and productivity.
Data Protection
The UK General Data Protection Regulation (UK GDPR) states businesses must process personal data lawfully and transparently, only collect data for specified, legitimate purposes, and ensure data accuracy and implement appropriate security measures.
Intellectual property
Protecting your intellectual property (IP) is crucial in maintaining a competitive edge. Consider registering trademarks for brands and logos, patents for any inventions and innovations, and copyright any creative works, such as writing, music and art.
Support with starting a business
The above suggestions aren’t exhaustive and it’s likely that you’ll face a number of challenges and have many more questions along the way. That said, there are plenty of resources to support and assist your business journey.
You’ll find financial support and guidance provided by the government, such as help with writing business plans and government backed Start-Up Loans. There are also plenty of resources available online, such as our tips for starting a small business, to help when you’re starting out. Finally, speaking with other business owners in your local area can offer valuable insight into how they started out and could help you avoid potential pitfalls.
Alternatively, if you’re looking to enhance your business skills through education we have a number of business courses which could help. For example we have a BSc in Business Management, BSc in Business Management with Law and a BSc in Business Management with Marketing. We also have a number of postgraduate business courses for graduates.
Whilst education isn’t for everyone, further study can help bridge the gap between theory and practice. By combining in depth knowledge with practical experience our courses are designed to address the complex challenges ahead.
Launching a business involves careful planning. But, by understanding business structures, your legal obligations, and the support available you're better prepared to embark on a successful entrepreneurial journey.
Take a look at our range of postgraduate business courses and kickstart your business today.
