Starting a business in London in 2026 is faster, cheaper, and more straightforward than most people assume. A private limited company can be registered in under 24 hours for £12. You can be fully operational — with a bank account, HMRC registration, and insurance in place — within 48 hours of deciding to launch. This guide walks through every step in plain language.

Step 1: Choose Your Business Structure

Your business structure determines how you pay tax, how much personal liability you carry, and how you appear to investors and clients. The three main options for London entrepreneurs are:

Sole Trader

Register for Self Assessment with HMRC and you are trading. No Companies House registration required. You keep all profits after Income Tax and National Insurance. You are personally liable for all business debts. Best for: freelancers, consultants, and service businesses with low startup risk. Can always incorporate later as the business grows.

Private Limited Company (Ltd)

The most widely used structure for growth businesses. Registered at Companies House for £12. Your personal liability is limited to the value of your shares. You typically pay yourself a combination of salary (via PAYE) and dividends. Corporation Tax applies to company profits. Investors and corporate clients generally prefer to deal with limited companies. Consider using LegalZoom for basic company formation documents and templates.

Limited Liability Partnership (LLP)

Combines the tax treatment of a partnership (members taxed individually) with limited liability protection. Popular with solicitors, accountants, and architects. Requires at least two members and must be registered at Companies House.

Step 2: Register with Companies House

Registering a private limited company is one of the simplest bureaucratic processes in the UK:

• Go to companieshouse.gov.uk
• Choose a unique company name (check it is not already taken)
• Provide a registered UK address (your home address, an accountant’s address, or a virtual office service)
• Appoint at least one director (can be you)
• Define your share structure (most simple companies start with 100 ordinary shares at £1 each)
• Pay £12 online

Standard registration is processed within 24 hours. Same-day registration (£78) is available if needed. You will receive a Certificate of Incorporation with your company number — this is your proof of legal existence.

Step 3: Register with HMRC

Within 3 months of starting to trade, you must register your limited company with HMRC for Corporation Tax. The SBA’s business registration guide offers a useful parallel framework for understanding why each registration step matters for legal and tax compliance. Do this via HMRC’s online services at gov.uk/business-tax.

If you are a sole trader, register for Self Assessment at the same address. Deadline: 5 October following the end of the tax year in which you started trading.

If you hire employees (including yourself as a director taking a salary), you must also register as an employer and set up PAYE (Pay As You Earn) to deduct Income Tax and National Insurance from wages.

Step 4: VAT Registration

You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period. You can also choose to register voluntarily below this threshold — useful if you are selling to VAT-registered businesses (you can reclaim input VAT) or if voluntary registration signals scale and credibility.

Making Tax Digital (MTD) now requires VAT-registered businesses to keep digital records and submit returns via MTD-compatible software.

Step 5: Open a Business Bank Account

A dedicated business account is not legally required for sole traders but is essential for financial clarity and professionalism. For limited companies, a separate account is mandatory — company money and personal money must be kept separate.

Options range from traditional high street banks (Barclays, HSBC, Lloyds) to neobanks (Starling Bank is free and widely recommended for new businesses). See our full guide to business banking in London for a detailed comparison.

Step 6: Insurance

Two types of insurance are relevant for most London businesses from day one:

• Employers Liability Insurance: Legally required if you have any employees (including part-time, temporary, or fixed-term). Minimum £5 million cover required. Failure to hold this carries fines of up to £2,500/day.
• Public Liability Insurance: Not legally required but strongly recommended if you interact with clients, customers, or members of the public at your premises or theirs. Typically £1 million to £5 million cover.

Step 7: London-Specific Resources

London entrepreneurs have access to support infrastructure beyond national programmes:

• Mayor of London Business: The GLA’s Business pages (london.gov.uk/business) list current support programmes, grants, and accelerators specifically for London businesses
• London Growth Hub: Free business advice, events, and signposting to funding for London SMEs
• Local Enterprise Partnerships (LEPs): London’s LEPs channel government growth funding and provide free advisory services by borough
• British Library Business and IP Centre: Free workspace, databases, and expert clinics at the British Library, King’s Cross — genuinely world-class and completely free

What Does It Cost to Start a Business in London?

• Companies House registration: £12 (standard) or £78 (same day)
• Annual accountancy (basic): £500-£1,500/year for a simple limited company
• Business insurance: £200-£1,000/year depending on sector and cover level
• Business bank account: Free (Starling, NatWest for 2 years) or £5-£15/month
• Total minimum to get started: Under £500

Timeline: 48 Hours to Being Open for Business

• Hour 1: Choose name, structure, complete Companies House application (£12)
• Hours 2-24: Companies House processes and issues Certificate of Incorporation
• Hours 24-36: Open business bank account (Starling: 10-minute app process)
• Hours 36-48: Register with HMRC for Corporation Tax; arrange insurance
• Live: You are a UK business, trading legally

For guidance on finding the right professional support, see our London business lawyers guide and our London tax and financial services guide.

Ready to Launch?

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