5 things you need to start a company

Want to start your own business? You’re not alone. In the UK, around 381,000 new businesses (“business births”) were started in 2018. But many people struggle to work out exactly what they need to do when it comes to the nitty-gritty of getting their business idea off the ground. So, what do you need to start a business? We’ve got the answers. Here’s our company start-up checklist, providing budding entrepreneurs with a comprehensive to-do list of the five most important things needed to start a small business.

1.  Register your business

First off, you need to register your business. In the UK, most companies register as a sole trader, limited company, or a partnership:

Sole traders

If you’re a sole trader, you will be self-employed and run your own business as an individual. This means that you’ll keep all your business’s profits (after tax), but you’ll also be personally responsible for your business’s losses.

To set up as a sole trader, you need to do the following:

1. Check that being self-employed is the correct choice for your business

2. Choose a name for your business

3. Check which records you need to keep

4. Register for tax

Limited company

If you decide to set up a limited company, the business’s finances will be separate from your personal finances, but there are greater responsibilities around management and reporting.

To set up a limited company, you need to do the following:

1. Check that a limited company is the correct choice for your business

2. Select a name for your business

3. Choose a company secretary and company directors

4. Decide upon the guarantors and shareholders

5. Identify the people with significant control (PSC) over your company

6. Prepare documents that agree upon how to run your company

7. Check which records you need to keep

8. Register your company

Partnership

If two or more people are running a business together, a partnership is the simplest solution. You’ll personally share responsibility for the businesses, including profits, bills, and any losses made by the business.

To set up as a partnership, you need to do the following:

1. Check that a partnership is the right choice for your business

2. Choose a name for your business

3. Choose a ‘nominated partner’ (the partner responsible for keeping your business’s records and managing your tax returns)

4. Register with HM Revenue and Customs (HMRC)

After you’ve formally registered your company, it’s time to move onto some of the more practical things needed to start a small business.

2.  Set up your company bank account

The next item to cross off your company start-up checklist: setting up a company bank account. Even if you’re a sole trader, it’s a good idea to open a bank account solely for your business. Mixing up your personal account and your business account can make it more difficult to keep financial records, and a dedicated business bank account will appear more professional to any potential customers. When you go to set up your company bank account, be sure to have the following documents with you:

• Proof of ID (all named company directors will need to provide this)

• Proof of address (bank statement, utility bill, etc.)

You may also need to provide the bank with the following details:

• Contact details

• Estimated annual turnover

• Full business address

• Companies House registration number (partnerships and limited companies)

If you're business will operate in Europe, take a look at our guide to opening a European business bank account.

3.  Take out business insurance

What insurance do you need to start a business? In the UK, the only type of business insurance that is required is employers’ liability cover. This is mandatory for most businesses that employ staff, even if these staff are only employed on a casual basis. However, insurance can cover you against theft, mistakes, legal fees, and accidents, so if you can afford it, it’s probably a good idea to take out basic coverage. In addition to employers’ liability cover, buildings and contents insurance and professional indemnity insurance could be a worthwhile investment for new businesses.  

4.  Check whether you require any licenses or permits

Depending on what type of business you’re starting, you may need to obtain licenses or permits from the government. Of course, most businesses don’t require a license to run, but it’s always a good idea to double-check. Use this license finder from Gov.co.uk to see what licenses you may need to apply for.

5.  Start using a secure payments service

Once your business is registered, you’ve moved into your offices, and you’re starting to see your first orders trickle in, you should consider investing in an automated payments system like GoCardless. Direct Debit makes it easier to control your cash flow and take ad hoc and recurring payments. This is absolutely crucial for many start-up companies operating on a shoestring budget, as it ensures you get paid on time while cutting down the time spent chasing customers. Contrary to common misconception setting up Direct Debit for your small business is a simple process.

We can help

GoCardless ensures that you’re able to collect payments as soon as they’re due. Find out how GoCardless can help you with ad hoc payments or recurring payments.