Set up a company using our checklist

Setting up a company can be stressful, with a multitude of decisions to make and many factors to take into account. That being said, the incorporation process itself is really straightforward – particularly if you set up a company through an authorised formation agent.

However, there are many other general tasks associated with starting a business, and the choices can sometimes seem bewildering. So let’s take a look at some of the key aspects you’ll need to tackle.

1. Market research and business plan

The first step in starting any business (after coming up with the initial idea) is to decide whether there is a sufficient market for it to succeed. This involves thorough market research, such as:

• Competition: Who are your potential competitors, and how can you differentiate your product or service?
• Market size and profitability: Is there room for another business, or will profitability be difficult due to market saturation?
• Customers: Identify your customers and, ideally, speak to potential customers to learn about appropriate pricing, demand levels, etc.
• Research: There is often existing market research available online that helps build a better picture of the sector. It’s also worth reading articles from sector-specific commentators (e.g., in niche business publications), as they can highlight current and future trends.

If the market research looks positive, the next step will be to develop a comprehensive business plan. This is especially important if you wish to approach investors for seed funding, as they will want to see whether they can make a healthy return on investment (ROI).

2. Choosing a company name

There are many rules to follow when choosing a company name, and choosing the wrong one can result in an incorporation application being automatically rejected.

• Can my company have the same name as another company?

Issues regarding company names include:

• Sensitive and offensive words –Companies House maintains a list of ‘sensitive words’ which require the prior approval of the Secretary of State to use in a company name (e.g. words which represent a regulated activity or imply a connection with the UK government).
• ‘Same as’ and ‘too like’ names – names obviously cannot be identical to an existing company on the register. But even if the name is slightly different, if it is deemed to be too similar to another name, it is still not permitted.
• Limited – Another important rule regarding company naming is that limited private company names should generally end in either ‘Limited’ or ‘Ltd’ (the Welsh equivalents ‘Cyfyngedig’ and ‘Cyf’ can be used instead for companies registered in Wales).

3. Register your company

Limited companies must be incorporated with Companies House. It is possible to set up a company online, either direct with Companies House or by using an authorised company formation agent such as Quality Company Formations. Alternative methods include using third-party software or applying to set up a company by post using Companies House form IN01.

As well as registering your company, it will be necessary to register with HMRC for purposes of corporation tax – and potentially for PAYE, Self Assessment, and VAT.

4. Bank accounts and finance

Although it is not a legal requirement to have a dedicated business bank account, it is recommended as a way of ensuring that business records are kept separate from personal finances.

The financing of a business venture should be given some serious thought, as the first few months may only see meagre profits, or even losses. Work out how long any personal savings will last, and consider whether to take out business loans or ensure sufficient overdraft facilities.

Government loans and grants may be an option in certain sectors. Also, consider investors and crowdfunding opportunities.

5. Business premises

Many businesses, particularly service industries, start out from home, which can help keep costs down. However, even for people who work alone, they will often benefit from office environments where they can share ideas with other entrepreneurs, and co-working spaces that cater to this need are currently thriving.

Even when a business expands, hot-desking in a co-working space can provide for multiple colleagues to work in the same office, albeit shared with other businesses. But at some point, a dedicated office may be required.

Physical shops will generally require dedicated premises, and it is vital to ensure that any property is allowed to be used for the required purpose in accordance with the Town and Country Planning (Use Classes) Order 1987 (e.g. many business properties can only be used for offices, as opposed to cafes or restaurants, etc.).

6. Marketing and brand

Marketing your new business is often key to attracting new customers. Unless you have a shop or retail business – in which case business premises with a sufficient level of footfall are crucial – websites and online marketing will play one of the most important roles in drumming up business, particularly at the start.

Although websites can be created quite easily these days, it often pays to engage a professional, especially for graphics (e.g., the company logo) and content. A branding expert can help with both creating visuals and messaging that appeal to your target market and ensuring consistency across the board.

Aside from building an attractive and user-friendly website, it is helpful to get to grips with various other online marketing tools, such as:

• SEO: Search engine optimisation (SEO) is all about driving traffic to your website and increasing its visibility. Creating compelling, genuinely helpful content, such as educational blog articles, can help attract potential customers.
• Advertising: Many businesses use online ads to generate additional traffic, often in combination with SEO, and the most widely used service is Google AdWords (since Google accounts for around 90% of the search engine market).
• Social media: A powerful tool for your brand when managed effectively. By dedicating time to platforms like Facebook, LinkedIn, and Instagram, you can harness their potential to engage with your audience and promote your goals. If you find that you’re limited on time or resources, partnering with a freelancer or specialised agency can provide the expertise needed to elevate your social media presence and maximise its benefits.
• Analytics: In addition to generating traffic, it’s important to understand traffic fluctuations and flows to improve your website and ultimately drive more conversions from ‘eyeballs’ (i.e., website visitors) to customers and sales. Google Analytics is one of the most widely used web analytics tools and is free to use.

Other, more traditional forms of marketing may well be helpful, depending on your sector, e.g., leafleting, newspaper ads, TV ads, etc.

7. Supply chain

As well as finding customers, most businesses will also need to source reliable suppliers. These can range from professional services to manufacturers who are crucial to the production process (in the case of goods). Relevant contracts will need to be drawn up to ensure a robust, secure supply chain.

8. Permits, licensing, and insurance

Various businesses will require specific permits and licenses, depending on the product or service. For example, alcohol licenses must be obtained for any premises serving alcohol, while food manufacturers must ensure they meet food safety standards, etc.

Many companies will also require certain forms of insurance. Employers’ liability insurance is mandatory for any business that employs staff (hefty fines apply to employers who fail to take out this insurance).

Public liability insurance is another popular form of insurance and, although not legally required, can be very useful to insure against claims by the public (e.g. if a customer slips or trips on your business premises).

Professional indemnity insurance is often taken out by service companies providing professional advice, to protect themselves from claims in respect of their advice (e.g. if a client loses money due to poor financial advice).

9. Data Protection

Virtually all businesses process data, whether from employees, customers, suppliers, or third parties.

Since the General Data Protection Regulation (GDPR) came into force, significant fines can be levied for data breaches or the mishandling of data. It is vital that all businesses understand at least the basic requirements of the Data Protection Act 2018 and related legislation.

See the Information Commissioner’s Office (ICO) for more details.

10. Intellectual Property

Intellectual Property (often just called IP) refers to creations of the mind, including:

• Trademarks
• Patents
• Copyright
• Designs

Sometimes, the most important asset of a business lies in its intellectual property, so it’s important to ensure it is protected. For example, innovative products often rely on patents to prevent others from copying and selling them.

11. Employment law

As well as registering with HMRC as an employer and setting up payroll (PAYE), any company which employs staff must understand the legal obligations which it owes to its employees (as well as ‘workers’ who are not employees). Various employment laws which must be taken into consideration include:

• Health and safety
• Unfair dismissal
• Discrimination and protected characteristics
• Redundancy rights
• Working hours
• Workplace pensions
• Grievance procedure

The Advisory, Conciliation and Arbitration Service (ACAS) provides helpful guidance on employment law.