To start your own business you need several important things – an idea, a lot of determination and the funds available to get the ball rolling. But how much does it cost to start a business? From company formation prices and legal requirements, to payroll and insurance, recognising the costs of starting a business can make sure your idea is viable.
Start Up A-Z, the only free company formations agent in the UK, has created a guide for new entrepreneurs to help them understand what costs they should be aware of when starting a business.
What are the typical UK business costs?
When setting up a business, these are some typical costs that you should be aware of:
- Company formation: In the UK, you need to register your company with Companies House to form your new business. You can either do this yourself through the Companies House website, which costs £50
- Registering for taxes: You’ll need to register for Corporation Tax within three months of starting to do business. You can register for free or hire an accountant to sort it for you if you’d prefer. How much an accountant charges for small businesses will vary from £60 a month to £250 depending on your turnover and where in the UK you’re based.
- Business insurance: What business insurance you’ll need will depend on the nature of your company and if you have employees. If you’re looking to hire people to work with you, you’re legally required to have employer’s liability insurance. You may also choose to take out public liability insurance if you regularly communicate with or serve members of the public. How much your business insurance will be will depend on the type you need and your cover limits.
- Branding: There’s no doubt you’ll want your business to stand out from the crowd. If you need help establishing your company’s image, our branding package is available for £190, which includes all your core branding elements. Alternatively, to keep costs down you may choose to hire a freelancer to put together a company logo for example.
- Domain: To support your professional image, you’ll want to register your domain. How much your domain will cost will depend on the type you choose – ‘.com’ sites typically range from £10 to £17 a year, whereas if you’re a tech business you may prefer a ‘.io’ domain which can cost you up to £70 a year.
Ways to minimise your startup costs
The more money you can save when starting out, the more you’ll have to grow your business over time.
Here are some ways you could reduce your spending when setting up your business:
- Rent rather than buy: There may be some equipment you only need short-term, like a camera to take product photos. Could you borrow from a friend or rent it rather than buying one yourself? That way, you can see how much you actually use the equipment before you decide to buy.
- Online marketplaces: To keep costs down you could try selling your product online through sites like Etsy, eBay, Amazon or Business Support Club, before investing in your own website. Once your sales have blown up, you can get your own website sorted!
- Go paperless: Paper, ink and postage costs can add up quickly. You could go paperless by avoiding printing unless absolutely necessary, sending digital invoices and filing paperwork digitally rather than in a filing cabinet.
- Work from home: Do you really need to rent an office space from the get-go? You could test your business idea from home before you commit to a workspace.
- Tax relief: Look into the various tax reliefs and allowances you’re entitled to as a business owner. For example, if you’re self-employed you can deduct some of your running costs as part of your annual tax return, such as office stationery, insurance and bank charges.
You can view more information on the costs of starting a business here: https://www.suaz.co.uk/knowledge-base/how-much-does-it-cost-to-start-a-business