Business Law specialist Frank Scott-Ashe has created a helpful checklist for starting a small business.Contact our Team on 01225 462871 or complete the Contact Form below. |
Famously, Napoleon once remarked that “England is a nation of shopkeepers”, and we truly are an enterprising nation. As many of us discover, starting a business is both exciting and challenging. The entrepreneurial journey requires planning, research, and compliance with various legal and financial obligations. To help smooth the process, I have put together a step-by-step list of key considerations for starting a small business.
Thoroughly research your business idea
Before exploring the legal and financial aspects, it is essential to assess your business idea thoroughly, considering:
- Market research: Understand your target audience, competitors, and industry trends. Identify gaps in the market that your product or service can fill.
- Unique selling proposition (USP): Clearly identify what differentiates your business from competitors. Highlight what makes your offering distinctive and how it will attract your customers.
- Business plan: Develop a comprehensive plan detailing your vision, goals, financial forecasts, marketing strategies, and operational plans. Your business plan is vital, and others will need to review it, such as lenders when you apply for business finance.
- Choose a business name: Make sure your business name is not already in use. It must be unique and suitable for your business.
Choose your business structure
Your business structure impacts everything from day-to-day operations to tax and personal liability, so taking advice is essential. There are several options:
- Sole Trader: You are the business owner with full control, but you are also personally liable for any debts.
- Partnership: If you’re starting a business with someone else, a partnership could be the best option. You share profits, losses, and responsibilities.
- Limited Company: This provides a separate legal identity for your business, limiting your liability. It is a popular option for small businesses as it offers greater financial protection.
- Limited Liability Partnership (LLP): A hybrid structure that offers limited liability combined with flexible management.
See also: Why is a formal partnership agreement essential?
Register your business
You must formally notify the relevant authorities of your plans:
- Register with HMRC: If you’re a sole trader, you need to register with HM Revenue & Customs (HMRC) for tax purposes. Limited companies must register with Companies House.
- Register for VAT: If your turnover exceeds £90,000 (as of 2025), you must register for VAT. Even if you do not meet the threshold, you can choose to register voluntarily to reclaim VAT on your business purchases.
- Obtain any necessary licences: Depending on your business type, you may need specific licences or permits (e.g., if you’re selling food, operating a takeaway, or running a financial service).
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Open a business bank account
Having a separate business bank account helps you manage your finances and keeps personal and business expenses distinct. It is also essential for limited companies, as it is a legal requirement to keep finances separate.
Organise your finances
- Funding your business: Decide on how you will finance your business. Options include personal savings, bank loans, government grants, crowdfunding, or investment from venture capital.
- Open a business credit account: This is important for tracking expenses, making payments, and building your business credit score.
- Prepare for paying taxes: Understand your tax obligations. As a sole trader, you will need to pay Income Tax and National Insurance. If you run a limited company, are responsible for Corporation Tax, VAT, and PAYE for employees.
- Bookkeeping and accounting: Invest in accounting software or hire an accountant to manage your finances. Maintaining accurate records helps to avoid problems with HMRC and makes tax season much more straightforward.
Get insured
Although not always a legal obligation, insurance is essential to safeguard your business against unexpected events. Types of insurance include:
- Public liability insurance: Provides cover if a member of the public is injured or their property suffers damage due to your business activities.
- Employer’s liability insurance: If you employ staff, this is a legal requirement and safeguards you against compensation claims for employee injuries or illnesses.
- Professional indemnity insurance: This is essential if you offer advice or services that could lead to legal action.
- Product liability insurance: If you manufacture, distribute, or sell products, this will cover you if your products cause harm.
Create your website and online presence
A professional website and an active social media presence are vital for small businesses today. Here’s what you need to do:
- Domain name and hosting: Purchase secure web hosting and a domain name that reflects your business and its name.
- Design your website: If you lack web design skills, hire a professional. Your website should be user-friendly, mobile-responsive, and SEO-optimised.
- Create business profiles on social media: Platforms like Facebook, Instagram, and LinkedIn help you connect with your target market. And do not forget to set up your Google Business Profile.
- Online payment system: If you are selling products or services online, set up a secure online payment system (e.g., PayPal or Stripe).
Hire employees
You might not need to employ staff at first. Nevertheless, it could become essential as your business grows:
- Advertise positions: Use platforms such as LinkedIn, Indeed, or local job boards to find suitable candidates.
- Employment contracts: Clear, legally-compliant employment contracts are essential, and you should contact us for assistance in drafting tailored documents.
- Register with PAYE: If you are employing anyone, register with HMRC’s PAYE (Pay As You Earn) system to ensure the correct tax and National Insurance contributions are deducted from salaries.
- Health and safety: Ensure your workplace complies with health and safety laws, including risk assessments and employee welfare. Consider taking advice to ensure you are compliant.
Create a marketing plan
Marketing your business is crucial for expansion. Your marketing plan should include:
- Branding: Create a logo, select brand colours, and maintain a consistent voice across all platforms.
- Digital marketing: Use SEO, content marketing, social media marketing, and email campaigns to reach potential customers.
- Traditional marketing: Depending on your business, consider local advertising, such as flyers, posters, or direct mail.
- Networking: Attend industry events and local business meetups to broaden your network and discover opportunities for growth.
Understand your legal obligations
Ensure you are compliant with applicable laws, including:
- Data protection: Ensure compliance with the General Data Protection Regulation (GDPR) if you handle customer data.
- Consumer rights: Familiarise yourself with consumer protection laws, including the Consumer Rights Act 2015.
- Health and safety regulations: Ensure that your workplace complies with health and safety standards and provide necessary training to staff.
I hope you found this checklist for starting a small business helpful. Remember, always seek advice from your solicitor to ensure you have the correct contractual and other legal paperwork in place before you begin. If you have any questions, please do contact me on 01225 462871 or by email: frank.scott-ashe@blbsolicitors.co.uk