Setting up a Business: Checklist

It’s always worth having a run through to make sure there isn’t anything you’ve missed when setting up your business. We’re sure you’ll have most of these covered, but it never hurts to be doubly-sure! In this guide, we’ll run through the steps to take when setting up your own business.

Deciding upon your company structure

This is fundamental and something you’ve probably already decided, so we will just briefly run through the options available.

Sole trader

As a sole trader, you are the sole owner of the business, and you and your business are treated as one combined financial and legal entity. Because this is the simplest way of working, it is also one of the most popular options for those starting out.

Limited Company

A limited company is its own legal identity, separate from you as the owner and any other directors and shareholders. This means that, in most circumstances, the company’s finances and liabilities are separate from your personal ones. Every limited company must be registered with Companies House.

In some circumstances, this can be more tax efficient than working as a sole trader, although it depends on your income and how you take money from the company.

In our Freelancer, Sole Trader or Ltd Company guide we give the top tips when deciding whether to work as a sole trader or ltd company, outlining the advantages and disadvantages of each.

Partnership

As the name suggests, the business is shared between two or more owners. Our full guide to starting up a partnership outlines the key considerations for this type of business, and how you would go about setting one up, depending on the type of partnership you choose.

Choosing a business name

This is one of the fun parts of starting your own business! How you secure your chosen name depends on your business structure.

If you are a sole trader, you’ll want to check that no one else in your business arena is using the same or a very similar name, purely so people don’t confuse you with another business.

You should also check that you are not using someone else’s registered trade mark.

Here, in our answer to ‘How do I choose a company name as a Sole Trader?’ we explain the do’s and don’ts.

You must also ensure your name is not offensive, does not infringe an existing trade mark and does not contain certain sensitive words or expressions without the appropriate permission.

If you’re choosing a name for a limited company, you’ll also need to check that it can be registered with Companies House. Registering a company name prevents another company from being registered under the same name, although it does not automatically give you trade mark protection.

For partnerships, the rules differ depending on whether you’re setting up an ordinary partnership, limited partnership or limited liability partnership. Limited partnerships and limited liability partnerships will need to register with Companies House.

Understanding clients and supplier needs

This covers quite a broad ground! You need to think through how your status affects how you deal with clients and suppliers.

Let’s start with VAT. You must register for VAT if your VAT-taxable turnover exceeds £90,000 over the previous 12 months. You must also register if you expect your taxable turnover to exceed £90,000 in the next 30 days alone.

You may simply choose to register for VAT even if your turnover is lower than that, if you think it will benefit you in your industry.

Some businesses prefer to deal with other businesses that are VAT registered as it can give the perception that you are established and of a certain size.

Our Contractor’s Guide to VAT explains this further.

You’ll also need to consider whether you need any extra cover when it comes to insurance, which we’ll cover later in this article.

For those contracting through a limited company, IR35 is something you need to be on top of.

The IR35 rules are designed to determine whether someone working through an intermediary, usually their own limited company, would have been regarded as an employee for tax purposes if they had been engaged directly by the client.

If you work through your own limited company, your IR35 status can affect how your engagement income is taxed.

Do you need an IR35 check? We have an exclusive offer with Kingsbridge Insurance for our clients: a free IR35 status review.

Setting up payment structure and employees

Talking to your small business accountant will enable you to determine the most tax efficient way for you to pay yourself, not just the when and how much, but for limited companies that’ll be whether it should be a mix of salary and dividends.

For limited company directors, the most appropriate salary level depends on your wider circumstances, including Income Tax, National Insurance, whether the company can claim Employment Allowance, and the effect on your National Insurance record and State Pension entitlement.

If you have employees, you’ll need to set up your payroll correctly. You’ll need to register with HMRC as an employer and enrol eligible employees in a workplace pension scheme. You can then operate the payroll yourself or through your accountant.

In addition, you may need to take out employer’s liability insurance and adhere to certain health and safety requirements.

Will you need a separate business bank account for your small business?

Even if you’re operating as a sole trader, it’s worth setting up a separate business bank account. It’s much simpler to run that way and will help you manage your finances effectively.

You can use your personal account if your bank allows it, although we wouldn’t advise it – when it comes to bookkeeping and accounting, it’ll be much clearer if business and personal transactions are kept separate.

A limited company is a separate legal entity, so you must keep its finances separate from your own. In practice, a dedicated company bank account is the clearest and simplest way to do this, and it makes bookkeeping and accounting much easier.

Will your small business need insurance?

If you have a limited company, the company is a separate legal entity, so your personal finances are usually separate from those of the business. However, you may still need insurance to protect your business in the event something goes wrong.

As a sole trader, you and your business are considered one single legal entity, so it’s particularly important to consider what insurance you need to protect yourself financially.

The most common insurance policies are:

Public Liability – this protects your business against claims where someone is injured, or their property is damaged, as a result of your business activities. It isn’t legally required for every business, but some clients will insist that you have it in place before working with you.

Public Liability can be relevant to limited companies, sole traders and partnerships. It can cover compensation and legal costs if someone makes a claim against your business.

Professional Indemnity – this can be particularly important if you provide professional advice or services. It protects you if a client brings a claim against your business in relation to work you have done for them.

Some clients will insist that you have professional indemnity insurance in place before they will deal with you. Many sole traders and consultants also choose to take out this type of cover.

Employers’ Liability – if you employ staff, you will normally need employers’ liability insurance. Some exemptions apply, including in certain cases where you employ only close family members.

This cover protects your business if an employee claims compensation for an illness or injury caused by their work.

Other insurance products available include IR35 insurance, Cyber Liability Insurance and Legal Expenses Insurance.

If you are unsure what levels and types of cover you need, contact an insurer, like our partners at Kingsbridge.

What bookkeeping tools will I need?

Good software is the easiest way to keep your financial records in order and up to date.

Here at Integro, we can include FreeAgent in our bespoke accounting service packages for small businesses.

It provides a seamless way to update your company records regularly with minimal time or fuss.

This is especially important for limited companies, as keeping accounting records for at least six years is generally mandatory and, should HMRC investigate you at any time, you’ll have the information you need to hand.

It’s also worth noting that if you are a VAT-registered business, you must keep the records required under Making Tax Digital digitally and submit VAT returns using compatible software.

Making Tax Digital for Income Tax is also being introduced for sole traders and landlords.

From 6 April 2026, it applies to individuals with qualifying gross income from self-employment and property of more than £50,000. The threshold falls to more than £30,000 from April 2027 and more than £20,000 from April 2028.

Those within the rules will need to keep digital records and use compatible software to send information to HMRC.

Once you’re confident that you’ve made all the decisions about how you want to structure your business and run it – and remember you can always change your mind at a later date as long as you’re fulfilling any obligations that you need to – get in touch with us at Integro. Why not take a look at our comprehensive, bespoke accounting services for small businesses. We’d love to talk to you about how we can help you make your small business a success.