Starting a business could initially feel like a pipe dream. It is a more common idea than you think, with many people taking that step to start their own company. There are around 5.7 million companies in the UK, and around 75% of those have no employees beyond the owners.

Even if you’re starting small, opening a business can feel complicated, particularly when you think about having to navigate registration, finances and premises for the first time.

We’re going to dive into how to open a business in the UK, business structure options, knowing your registration and tax responsibilities and how to decide on the right workspace.

If you’ve already registered your business and are looking for flexible office space solutions, Mersey Bank Business Centre has a range of serviced office options at competitive rates. Get in touch with the team at 0151 459 8102 today for more details.

How To Open a Business in the UK: Decide on Your Business Structure

The most common structures for your business are setting up as a sole trader or a limited company.

Sole Trader

Becoming a sole trader means you run the business personally. There is no legal separation between you and the business, so you are personally responsible for business debts and losses.

You will be classed as self-employed, working for yourself and making all decisions around the business.

Limited Company

By setting up a limited company, you create a separate legal entity from yourself. This usually means some shareholders own the business and directors do the day-to-day running.

Why Your Business Structure Matters

Your business structure defines what type of business you want to be. If you are looking to work for yourself, alone, with less administrative fuss and set-up costs, being a sole trader is better for you. If you are expecting substantial growth, are looking for investors and want to have more “credibility” and have employees, then becoming a limited company is the better option.

Choose and Register Your Business Name

You should choose a name that suits the service you are looking to provide, is memorable and should be unique.

As a sole trader, you can use your own name or choose another name for your business. This name cannot contain anything like “LLC” or “limited” to suggest you are a different business structure. The name also cannot be offensive or too similar to another company’s trademarked name.

If setting up as a limited company, you have to register a company name. This must be unique, and you can use the government checker to see if your desired name has been taken. This name must be registered before you start trading.

If you want to give your brand extra protection against copycats and sell and license your brand, you can register your trade mark. This can cost at least £205 and lasts 10 years. You can search online to see if a similar trade mark to your brand already exists in the UK.

Register With the Relevant Authorities

If you are a sole trader, you must register for self-assessment with HMRC if your business earns over £1,000 in a tax year. You pay income tax and National Insurance on profits you make.

As a limited company, you must register your company with Companies House. You can use this service to set up corporation tax and register for PAYE with

HMRC if you’re employing staff. You’ll also have to prepare documents such as a memorandum of association and articles of association to outline how your business will be run.

You must register for VAT if you make over £90,000 a year from your business or will go over that threshold in the next 30 days.

Set Up Your Business Finances

Setting up your finances is important to help you keep track of everything and ensure you remain compliant with tax and other official obligations.

You should:

• Open a separate business bank account to keep business and personal spending apart.
• Set time aside for accurate bookkeeping, keeping records of income, expenses and transactions.
• Work out an invoice system and track payments to ensure a consistent cash flow.
• Create a realistic budget to know what you want to spend, better manage costs and have contingency plans for unexpected expenses.
• Even as a sole trader, keeping your business and personal finances separate and organised is important to make tax reporting easier and helps you see how well your business is doing.

Understand Your Tax and Legal Responsibilities

As explored above, your tax responsibilities can vary. In short, as a sole trader you’ll have to pay income tax, National Insurance, VAT (if the threshold is exceeded) and keep accurate records of all business income and expenses.

As a limited company, you’ll pay corporation tax, National Insurance, VAT and National Insurance Contributions if you have employees. If you are the director, you are legally responsible for ensuring correct returns are filed, and you pay the right amount to HMRC on time.

In some cases, you may also need suitable insurance, licences, permits, or sector-specific registrations. All this should be sorted out before you start trading.

Find the Right Workspace

One of the final steps is deciding where you run your business. In today’s world, there are now many flexible options for businesses of all sizes.

• Virtual office – A virtual office can provide you with a professional business address and services such as mail handling to allow you to work from home but have some separation from your business, giving you privacy and more credibility.
• Coworking spaces – These are shared spaces where you can rent a single desk on an ad-hoc basis, have an ongoing flexible arrangement or rent a private office.
• Serviced office – Serviced offices offer a flexible alternative to traditional leasing, giving you access to a private workspace, managed by someone else, that is ready to use for a fixed monthly cost.

With these options, you are not chained to what you choose. As your business grows, your needs can change and so can your workspace. If you start in your kitchen, using a professional virtual office for your business, soon you can move up to needing a serviced office if you get employees or want to gain access to more support services.

At Mersey Bank, we have a range of serviced office options that are designed for modern businesses. Check out our available rooms and find the right workspace for you.

Build Your Business Foundations

If you want to start a business, you need to think ahead.

It’s critical to set up strong foundations so that you are ready for growth and success. You should think about branding before you begin; you want it to accurately reflect your ethos and appeal to your intended customer base.

A website is important for branding and acting as a central hub for your business. It should be easy to navigate, look professional and be a helpful resource for users.

You’ll also need to consider how you’re going to get customers, how sales will work, your stock and basic communication. Getting a handle on basic operational systems will help you not feel overwhelmed.

Now, this may all seem like a lot, and it can be. You don’t have to do everything at once; instead, focus on doing the basics and building sustainably, rather than attempting to become Tesla after one week.

Need a Flexible Office Space for Your New Business? Check out Mersey Bank

We hope you’ve found our guide on how to open a business in the UK useful. If you are a new or growing business looking for a flexible workspace, Mersey Bank Business Centre may be able to help.

We have many flexible and cost-effective workspace options located close to Liverpool, perfect for anyone in the greater Merseyside area. Get in touch today to find out more about Mersey Bank Business Centre.