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The cost of starting a business in the UK

Small ecommerce business owner at her desk with boxes of stock, her laptop open on her website and smiling at her phone

When taking your first steps into business it is important to have an idea of what the financial commitment will be and to have an understanding of the costs you will face along the way. 

The total cost of setting up a business will vary depending on the nature of the business. For example, if your business is providing a service, such as graphic design or writing services, and you intend to sell your services online then your start up costs will be a lot less than if you want to start your own bakery, where you need to find premises from which to operate and buy expensive equipment to get going. 

In this article, we will cover the following areas:

  • The cost of registering a limited company
  • The cost of registering a sole trade business
  • Common costs on starting a business in the UK

The cost of registering a limited company

If you decide to run your business as a limited company you will need to register your company with Companies House

The cost of this is just £12 and you will be provided with a certificate of incorporation. Make sure you keep this document somewhere safe.

The cost of registering a sole trade business

There are no costs associated with registering your sole trade business. You simply need to let HMRC know that you will be paying your tax via self assessment

You can do that through this HMRC webpage.

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Common business start up costs 

There are a number of possible start up costs that you will face, depending on the nature of your business. Some of the most common costs you are likely to incur are:

Website creation and running costs

In a digital age, it is likely that you will operate some kind of website, regardless of whether you’re selling online or not. If you’re willing to build and run your own website, costs can be kept relatively low at around £20 a month. 

However, if you plan on paying an expert to build your website you are likely to be paying £500+.

Branding and marketing 

This might include paying experts to develop social media content, paying for digital advertising, or printing brochures, flyers and business cards. 

Again, the cost of this will depend on how much you are willing to do yourself. You could pay a social media expert to develop and run adverts on your behalf but this will likely cost several hundred pounds a month. 

Alternatively, you could spend some time getting to know your market and engaging with them in order to develop your own social media posts. 

As a small business owner, you will need to be taking on many different roles, so you will need to decide in what areas of your business your time is most valuable, and consider getting outside help for the other areas. 

Prototypes and stock

If you’re selling a physical product then developing prototypes will be an important upfront cost. You may need to pay for prototypes from several different manufacturers to ensure your product is just the way you want it. 

Once you’re happy with your prototype you will need to pay for stock, which will be a significant cost you will need to pay before you can start trading.

Professional fees 

This could include engaging an accountant (e.g. Beany), solicitors, paying for insurance etc. Ensuring that you have the right professionals behind you and suitable insurance cover is essential for ensuring you get off on the right foot. 

Many traditional accountants charge several thousand pounds a year simply for preparing your accounts and your tax returns. Depending on the type of accountant you use a set of company accounts, company tax return and personal tax returns for yourself and your business partner could cost £4,000 or more. Ad hoc support and advice will then be charged on top of this.

Here at Beany, we charge a fixed monthly fee, which covers accounts and tax returns for yourself, your business partner and your company, and unlimited support. This provides certainty for you in respect of cash flow and having unlimited support on hand at all times of the day is hugely reassuring to our clients. 

Business liability insurance is so important for new businesses and typically costs less than £150 a year, depending on the industry you are operating in.

Other costs

There are many other possible costs associated with starting a business, including recruitment and leasing or buying business premises. For some business owners, these costs may come a little further down the line once the business has got on its feet. 

Producing a cash flow forecast is an effective way to determine whether you have the funds needed to get your business going, or whether you need to source alternative sources of finance.

Who are Beany? 

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant would. ​

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.

Tori as a dog

Tori Ma

Performance marketer

Performance marketer at Beany, and into true crime documentaries.

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