How to start a business

0 1 7 minutes read

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

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

Here’s what we cover in this article:

Steps to start

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 the market, test it and iterate if necessary, as that is a good way to see if people are interested in what you are selling.

So, whether you’re starting your own business out of personal passion, a gap in the market or just because you want to work for yourself, get ready to take the first steps to make it a reality—read on for helpful tips as you begin your exciting journey of starting and running your business.

The basics of starting a new business

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

When starting a new business, you will need to register with HMRC. Most companies are established as a sole trader, partnership, or limited company.

Choose your business name, but check on Companies House and Google to see if it’s already in use. If you use the same name as another business, you may run into trouble with trademark issues, or “passing off”—a situation where it can be said (even if unintentionally) that you’re trying to benefit from another business’s reputation.

Once you have a name, it is not a bad idea to buy a domain name for your company’s website, and to register social media accounts. Even better, this is another way you will find out if there is another business with the same or similar name.

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

It is also worth getting an accountant, who will help you stay on top of your tax and other financial needs. Accountants also provide business advice, which can be a game changer. After all, they spend the whole day talking to businessmen. They have seen it all, and are always happy to share because your success is ultimately their success, too. (Tip: Check out the Sage Accountant and Bookkeeper Directory.)

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

Rules you need to know about starting a business

If you are setting up as a limited company, now there is an extra step to be aware of.

From 18 November 2025, all company directors and persons with significant control must confirm their identity with Companies House under the Economic Crime and Corporate Transparency Act. For a brand new company, you will complete this as part of incorporation, so it is worth considering before you file.

Another thing to remember is that, these days, software is not just a simple thing.

For many businesses it is a legal requirement.

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

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

Essentially, that means submitting quarterly updates through MTD-compatible software, then submitting a digital tax return using the software—rather than dealing with the hassle of spreadsheets once a year. Therefore, it pays to choose the right tool from day one.

It’s worth keeping an eye on your income: once it’s over the VAT registration threshold (£90,000 from 2026), you’ll need to register for VAT within 30 days. This is something you should discuss with an accountant if you are getting anywhere near that level, because timing can be an issue. You can be left out of pocket if you don’t pay VAT on your invoices.

Expert advice on business planning

Working with a professional when planning a business can help you land in the right place.

As previously noted, an accountant can help you with your tax matters 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 is worth seeking advice from a lawyer or accountant.

For some businesses, this may be a straightforward option.

However, if you have business plans in many countries, you will have international tax and legal issues to consider, which makes things more complicated. Don’t rush to make a decision. Do your research, seek advice, and implement your plans.

Professional advice can also come in handy when it comes to creating important documents like a business plan—see below for more details on why having one can really help your business.

How do you find a successful business idea?

Getting the perfect idea can be a tricky business.

For some people, it may be as simple as turning a passion, hobby or skill set—like fitness, baking or social media management—into a business idea. Some people may be trained by their employer and realize that they can take those skills and apply them to a new business.

For others, however, the desire may be there to create a business but pinning down the idea is difficult.

Another way to come up with a business idea is to study emerging trends.

Check current business trends, read industry-specific research, talk to friends and family, see what’s happening in the news, and talk to people who work in the industry you want to start in.

AI chatbots can speed up that research too—helping you summarize market reports, test ideas and existing gaps—although they work best alongside real conversations with potential customers, not in place of them.

For your business to thrive, 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. Otherwise, your company will not last long. And remember, a great business idea isn’t enough to be successful—you need to back it up with planning, implementation, dedication, and hard work.

How to write a good business plan

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

By creating a business plan, you will have a working framework that will guide your efforts, passion and skills, and keep you focused.

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

By using your business plan to build your company’s milestones, you can set goals that will keep you going in your bid to build and grow your company.

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

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

Starting different types of business

Do you want to create a business but need advice tailored to your target market? We have created a series of industry-specific articles to help you and save you time.

Food and beverage businesses

Do you have plans to open a restaurant, run a coffee shop, start a food truck or sell your products in a supermarket? The food and beverage industry is competitive, so your local planning will help.

Here are some articles we have on Sage Advice that may help:

Internet businesses and ecommerce

Planning to sell goods online? It’s tempting to move in, since you don’t have to worry about buying real estate—but you still have to consider how you’re going to deliver your products and services to your customers. Then you have to decide how you will sell your goods, how you will market your business and what your online store will look like—that is, your website.

Here are some articles we have here at Sage Advice for you to check out:

Shops and retail businesses

Do you have aspirations of owning your own store—the right brick-and-mortar option? Having a physical location to sell your goods will have its challenges, especially the cost of buying or renting a property and finding the right location, among other things, so it is in your best interest to be prepared.

Here are 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 are ready to strike out on your own? Maybe 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 many steps to take when starting your business, but by taking your time and putting in proper planning, you will make things easier.

Remember, use professional 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’re always aware of your cash flow if you want your business to succeed.