YF AccountingLast updated: 3 September 2026
6 min read
Launching a business in the UK in 2026 comes down to a short list of jobs done in the right order: choose your structure, register with HMRC (and Companies House if you incorporate), open a business bank account, set up bookkeeping software, sort your insurances, and know your VAT position. Get those six right in your first month and you avoid most of the expensive untangling I get asked to do later. Here is the full checklist, in the order I would actually do it.
Step 1: Choose your business structure
This is the decision that shapes everything after it: sole trader, partnership or limited company. Sole trader is the simplest: one HMRC registration and you are trading, with your profits taxed through Self Assessment. A limited company gives you limited liability and more planning options, at the cost of public filings and more admin. Since the April 2026 dividend tax rises, the tax gap between the two has narrowed considerably, so do not incorporate just because someone in the pub said it saves tax, because it often no longer does.
My starting a business guide goes deeper on this choice, and if you are unclear on the jargon, start with sole trader vs self-employed. You can change structure later, but it is cheaper to get it right first time.
Step 2: Register with HMRC, and Companies House if incorporating
Sole traders register for Self Assessment with HMRC. The deadline is 5 October after the end of the tax year in which you started trading, but do it straight away and be done with it.
Limited companies are incorporated at Companies House, £100 for the standard online application since the February 2026 fee rise, and there is a newer hurdle to know about: since 18 November 2025, directors and people with significant control must complete identity verification, usually through GOV.UK One Login, before they can be appointed. Budget a £50 confirmation statement fee each year too. My guide on how to form a limited company in 2026 walks through the whole process, or my company formation service can do it for you and get the share structure right on day one, which is much harder to fix afterwards.
Depending on your trade and premises, check whether you need licences or permits: food businesses, taxis, childcare and alcohol are the usual suspects. Your local council’s website is the place to start.
Step 3: Open a business bank account
If you form a company, this is not optional: the company is a separate legal person and needs its own account. But my advice is the same even for sole traders: always separate business and personal money. It makes reconciling transactions, claiming expenses and surviving an HMRC enquiry dramatically easier, and it costs almost nothing. The app-based banks will have you open within a day, and many high street banks still offer free introductory periods for new businesses.
Step 4: Set up bookkeeping software from day one
Do not wait until the shoebox of receipts becomes a problem. Cloud software with a live bank feed means your records build themselves as you trade, and it future-proofs you for Making Tax Digital. Sole traders with income over £50,000 already file quarterly digital updates, with the £30,000 tier joining from April 2027.
The main contenders are Xero, QuickBooks and FreeAgent. Broadly: Xero has the strongest integrations and scales best, QuickBooks is friendly for smaller businesses, and FreeAgent is often free with certain business bank accounts. My advice on Sage remains what it has always been: run for the hills. I compare them properly in Xero vs QuickBooks vs FreeAgent, and my small business bookkeeping guide covers the habits that keep the records clean.
Step 5: Know your VAT position
You must register for VAT once your taxable turnover in any rolling 12 months passes £90,000, and it is a rolling test, not a tax-year one, which is how it catches people. Registering voluntarily below the threshold can make sense if your customers are VAT-registered businesses or you have significant VAT on costs to reclaim. Plan for it rather than reacting to it: my guide on approaching the £90,000 VAT threshold explains what to do before you cross the line.
Step 6: Sort your insurance
- Employers’ liability: a legal requirement (with narrow exceptions) as soon as you take on staff, with serious daily fines for going without.
- Public liability: covers injury or damage to third parties; effectively essential if customers visit you or you work on other people’s premises.
- Professional indemnity: covers claims that your advice or work caused a client loss; many contracts and professional bodies require it.
- Contents, stock and cyber: worth pricing up once there is something to lose.
Step 7: Get the money basics right
A one-page plan beats a 40-page business plan you never open again: who buys from you, what it costs to deliver, and a simple month-by-month cash flow forecast for year one. Cash flow, not profit, is what kills new businesses, so invoice promptly, chase politely but early, and keep a tax reserve from your very first sale (a fifth to a quarter of profits is a sensible starting habit).
If you need funding, look at the government-backed Start Up Loans scheme, your bank, and grants local to Greater Manchester before giving away equity. Borrow against a plan, not against hope.
Step 8: Decide what you are doing yourself
Plenty of founders happily run their own books; the value of an accountant early on is mostly in the decisions (structure, VAT schemes, how to pay yourself, what to claim) where a wrong default quietly costs money for years. A good fixed-fee arrangement means you know exactly what that help costs before you commit. If you are weighing it up, my guide on how to choose an accountant covers the questions worth asking (of me or anyone else).
Frequently asked questions
What do I legally need to do to start a business in the UK?
At minimum: register with HMRC for Self Assessment (sole trader) or incorporate at Companies House and register for corporation tax (limited company), keep proper business records, and take out employers’ liability insurance if you hire anyone. Sector licences, VAT registration and payroll only apply once you meet the relevant conditions.
How much does it cost to set up a limited company in 2026?
The standard online incorporation fee at Companies House is £100, following the fee increases from 1 February 2026, and the annual confirmation statement is £50. Directors must also complete free identity verification through GOV.UK One Login. Formation agents and accountants charge a little more to handle it for you and set the share structure up properly.
When do I have to register for VAT?
When your taxable turnover in any rolling 12-month period exceeds £90,000, or when you expect it to in the next 30 days alone. You can register voluntarily below that, which often pays off when your customers are VAT-registered businesses. Check the rolling total monthly, as it is not measured by tax year.
Do I need a business bank account as a sole trader?
Legally, no. You and the business are the same person. Practically, yes: a separate account keeps business transactions clean, makes your bookkeeping and tax return far quicker, and looks more professional to customers. Limited companies must have their own account, because the company’s money is not legally yours.
What is Companies House identity verification?
Since 18 November 2025, company directors and people with significant control must verify their identity with Companies House, normally through GOV.UK One Login using photo ID. It is a one-off check that then covers all your appointments. New directors cannot be appointed without it, so build it into your formation timeline.
Launching soon? Start with a free call
I help new businesses in Manchester and across the UK get all of the above done properly: structure, registrations, software and a plan for the first year’s tax. Fixed fees from £35 a month for sole traders and £50 a month for limited companies, with one point of contact who actually answers.
Book a free, no-obligation call or ring 0161 531 0959 before you launch. It is much cheaper than fixing things after.
This article is general information, not personal tax advice. For advice on your own situation, please get in touch.
Founder of YF Accounting, a fixed-fee, fully digital accountancy practice in Manchester serving SMEs, sole traders and landlords across the UK. One point of contact, unlimited support, no surprise bills.
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How Much Does an Accountant Cost in the UK in 2026?This article is part of our Starting a Business guide. See the full topic for related reads.