UK: +44 (0)20 3239 9065 | ITALY: +39 (0)28 7199 463

Legal Requirements for Starting a small business in the UK

What are Legal Requirements for Starting a small business in the UK | Business Law

Don’t start a business in the UK without understanding the legal requirements. To start a small business in the UK, these are legal requirements you need to follow. This article also covers the legal requirements and licensing procedures for foreign entrepreneurs, as well as the necessary legal documents for setting up a small business in the UK. 

Starting a business in the UK involves fulfilling several legal requirements. Whether you’re a new business owner or looking to expand, it’s important to understand the legal obligations that come with running a business in the UK. Before starting a new venture, you must decide on the type of business you want to set up and create a business plan that outlines your objectives and strategies.

Once you have a solid plan in place, you will need to register your business with Companies House and obtain any necessary licenses or permits. You will also need to open a business bank account and set up a system for tracking your finances. Networking and marketing are crucial aspects of growing your business, so it’s important to get your name out there through social media, word-of-mouth, and attending industry events. Consider seeking advice from a business mentor or joining a local business group to help you on your journey. With hard work, dedication, and a little bit of luck, you can turn your dream of owning a successful business in the UK into a reality.


How Much Does it Cost to Register a Business in the UK?

The cost to register a business in the UK varies depending on the type of business and how it’s registered. Registering a limited company can cost anywhere between £12 and £100, depending on whether it’s done online or on paper. If you choose to use an accountant or formation agent to help with the registration process, expect to pay additional fees. Other costs may include registering for VAT, setting up a business bank account, and buying insurance. It’s important to research and budget accordingly before registering your business in the UK.

Business Registration in the UK: Can Anyone Do It?

Yes, anyone can register a business in the UK regardless of their nationality or residency status. The process of registering a business requires submitting certain documents and paying registration fees to the government. The type of business structure chosen will determine the specific requirements for registration. For example, registration for a sole trader is different from that of a limited company. It is advisable to seek professional advice when registering a business to ensure compliance with regulations and to prevent any legal issues down the line.

To set up a business, you’ll need to prepare legal documents, such as a written agreement if you’re setting up as a sole trader or a partnership agreement if you’re starting a limited liability partnership. Choosing the right business structure is essential, as it will determine your legal obligations and the taxes you’ll need to pay.

In the UK, it is illegal to operate a business without registering with the appropriate authorities. This means that any individual or company operating a business without registration is breaking the law. There are different types of registration depending on the type of business, such as registering for VAT, registering with Companies House, or registering as a sole trader. Failure to register can result in fines, legal action, or even imprisonment. It is important to ensure that any business operating in the UK is registered to avoid any legal repercussions.

If you’re considering starting your own business, it’s important to ensure compliance with relevant laws and regulations. This is where corporate law services come in. Corporate lawyers can help businesses comply with legal requirements by advising on how to structure their business operations. They can also protect business interests in commercial transactions, such as mergers and acquisitions, partnerships, and joint ventures. In addition, corporate lawyers can assist with drafting and negotiating contracts, such as employment agreements, non-disclosure agreements, and vendor agreements, to ensure legal compliance and protection of business interests. Find out more about our Corporate structure & Growth services here.

When starting a small business in the UK, you must follow specific legal requirements. This includes registering your business with Companies House and HMRC, as well as obtaining liability insurance. You may also need to seek legal advice from a solicitor and hire an accountant to help with tax-related matters.

Yes, it is possible to obtain a visa if you intend to start a business in the UK. The most common visa for this purpose is the Tier 1 Entrepreneur visa, which requires a minimum investment of £50,000 in your business. You will also need to demonstrate your entrepreneurial skills and proficiency in the English language. Other options include the Innovator visa and the Start-up visa, which have different requirements and eligibility criteria. It is advisable to consult with an immigration specialist to determine the most suitable visa option for your individual circumstances. Learn more about Tier 1 Entrepreneur visa here.

Owning a Business in the UK: Visa and Residency Options

Non-UK residents can be sole traders in the UK, provided they have a valid National Insurance Number and can demonstrate their eligibility to work in the UK. However, they may need to satisfy additional requirements, such as registering for self-assessment with HM Revenue and Customs and obtaining the necessary permits or visas if they are not from a European Economic Area country. To comply with UK regulations and tax laws, seeking professional advice is critical.

Can I open a business account in the UK if I live abroad?

Yes, it is possible to open a business account in the UK if you live abroad, but it may depend on the bank’s requirements. Some banks may require you to have a UK address, while others may allow you to open an account using your non-UK address. It is advisable to contact the bank directly to find out their specific requirements and the documents you need to provide.

Non-UK residents can be sole traders in the UK if they have a valid National Insurance Number and can provide evidence of eligibility to work in the UK. However, they may need to meet additional requirements, such as registering for self-assessment with HM Revenue and Customs and obtaining permits or visas if they are not from a European Economic Area country. Seeking professional advice is recommended to ensure compliance with UK regulations and tax laws.

To register a business in the UK, certain legal documents are required. These include the company’s name and registered address, a description of the business activities, details of the company’s directors and shareholders, and the articles of association.

Starting a new business comes with many legal obligations that you need to follow. As a small business owner, you must register for VAT, comply with data protection regulations and carry out DBS checks on new employees, if applicable. You also need to provide written statements of terms and conditions of employment to your employees within two months of their start date.

In addition, directors and shareholders must provide proof of identification, such as a passport or driving license. Other documents that may be needed include a certificate of incorporation, a memorandum of association, and relevant licenses or permits. It is crucial to ensure that all necessary documents are correctly filed and up-to-date to prevent legal or tax issues in the future.

Read on to learn how to set up your new business in the UK step by step:


Image: How to set up a business in the UK?

  1. Choose a business structure: Decide on the type of business structure you want to register, such as a sole trader, partnership, limited company, or limited liability partnership.
  2. Choose a business name: Choosing the right name for your business is an essential part of starting a new venture. Before deciding on a name, make sure to conduct a search to ensure that it’s not already taken. You must also register your business with Companies House to make it a separate legal entity.
  3. Register your business: If you are registering a limited company or a limited liability partnership, register your business with Companies House. For other business structures, you may need to register with HM Revenue & Customs (HMRC).
  4. Obtain necessary permits and licenses: Depending on the type of business you are starting, you may need to acquire permits and licenses from local authorities or regulatory bodies.
  5. Obtain a National Insurance Number: If you plan to work in the UK, obtain a National Insurance Number (NIN), which is a unique number that identifies you for tax purposes.
  6. Open a business bank account: To manage your finances and accept payments, open a business bank account.
  7. Get legal support: Consider obtaining legal support to ensure compliance with all the necessary legal requirements and regulations.
  8. File annual accounts and tax returns: Once your business is operational, you need to file annual accounts and tax returns with HMRC.
  9. Hire employees (if applicable): If you intend to hire employees, follow the relevant legal requirements, such as obtaining a Disclosure and Barring Service (DBS) (where appropriate) check and providing a written statement of terms and conditions.
  10. Follow employment laws: Ensure you adhere to all employment laws and regulations, such as minimum wage requirements and employee rights.


Please also note that liability insurance is a legal requirement for all businesses in the UK. It’s a way to keep your business protected from financial loss in case of accidents or other unforeseen circumstances. HR software is the easiest way to keep personal data and employment records safe and secure. This way, you can avoid the risk of receiving a severe penalty for storing data improperly.

The type of legal structure you choose will determine the taxes you’ll need to pay. For example, a limited company is subject to corporation tax, while a sole trader or partnership is liable for national insurance. It’s important to seek legal support from a solicitor or accountant to ensure that you’re following the necessary legal processes and meeting all legal requirements for your business.

Note that the process of registering a business in the UK can differ depending on your specific circumstances and the type of business you are starting. It is advisable to seek professional advice to ensure compliance with all the necessary legal requirements.

How Long Does It Take to Register a Business in the UK?

Registering a business in the UK usually takes a few days when done online through Companies House. However, the process can take longer when registering by post. It’s important to have all the necessary information and documents ready beforehand to ensure a smooth and efficient registration process. This includes details such as the company name, type of business, registered address, director information, and payment for the registration fee. Once registered, you will receive a certificate of incorporation confirming your company status.

Although registering a business in the UK is generally a straightforward process, there are still steps that need to be correctly followed. It is recommended to seek legal support to ensure that all legal requirements are met and accurate records are kept to avoid potential legal challenges in the future. The process involves deciding on the type of business entity, registering with HM Revenue & Customs for tax and National Insurance purposes, and registering with Companies House if setting up a limited company. While the process itself is relatively easy, attention to detail is crucial to ensure compliance with all regulations and laws.

If you want to learn more about a practical guide for start-ups and SMEs, check out our blog at https://palazzolawboutique.com/legal-advice-for-startups/. Our blog offers valuable insights and legal advice for small business owners, entrepreneurs, and start-ups. We cover a wide range of topics, from legal requirements for starting a business in the UK to business structures, legal obligations, and liability insurance. Our team of experts provides practical guidance and support to help you navigate the legal aspects of starting and running a business. Whether you’re just starting out or looking to grow your business, our blog is a great resource for all your legal needs.

Our team is committed to offering customized and efficient legal solutions to fulfill your requirements, and we are eager to speak with you soon. If you are contemplating starting a business in the UK, we invite you to book a free 10-minute consultation with one of our experienced lawyers.


Ps. If you like this article, we would appreciate it if you like it, leave your comment or share it with your connections. 

Important Disclaimer: The content of this article does not have the character of a periodical and does not constitute a newspaper or an editorial product. It is only for general information purposes and shall not, in any circumstances, be considered bespoke legal advice or professional advice. The control of the information is made only for the content published on this website and not for the contents of the pages that are linked to this website. If you are currently dealing with an individual legal situation, you are invited to contact us.