Starting a business in the UK means more than finding customers and pricing your offer. The legal process of setting up a business UK founders follow determines how you pay tax, how much personal risk you carry, and which regulators you must notify. Getting the structure, registrations and ongoing duties right from the start protects you from fines, back-tax demands and disputes. This guide sets out the key legal steps for women starting a business in 2026.

The legal process of setting up a business UK step by step

1) Develop a business plan

A business plan is not a legal requirement, but it is the foundation of a compliant start. It forces you to define your target market, pricing, costs, sales forecasts and funding. If you need external finance, lenders and investors will expect a detailed plan. If you are self-funding, a one-page plan or business model canvas can keep you focused. A clear plan also helps you choose the right legal structure and identify the licences, insurance and registrations you will need.

2) Choose and protect your business name

Your business name must be legally available. If you form a limited company, it must be unique on the Companies House register and cannot be the same as, or too similar to, an existing company name. You should also search the Intellectual Property Office trade marks database to avoid infringing someone else’s brand.

Certain words are classed as sensitive and need approval before use. Examples include “Institute,” “Tribunal,” “Royal,” “British” and “Authority.” Your company name does not have to match your trading or brand name, but you must display your registered company name and other details on official correspondence and your website.

3) Choose a legal structure and register

Most UK start-ups operate as a sole trader, partnership or limited company. The right choice depends on your appetite for risk, how you want to pay tax, and whether you plan to employ people.

• Sole trader – the simplest structure. You run the business as an individual and keep all profits after tax, but you are personally liable for business debts. You must register for Self Assessment with HMRC by 5 October in your business’s second tax year.
• Partnership – two or more people share profits, losses and responsibilities. Each partner registers for Self Assessment and pays tax on their share. A limited liability partnership offers liability protection but has more filing requirements.
• Limited company – a separate legal entity from its owners, so your personal assets are usually protected if the business fails. You must incorporate at Companies House and pay the £50 online registration fee. Since 2025, every director and person with significant control must also verify their identity with Companies House. Directors have legal duties under the Companies Act 2006 to act in the company’s best interests and file annual accounts and a confirmation statement.

For help choosing, read our comparison of sole trader vs limited company UK structures. If you are leaning towards incorporation, see our guide to what is a limited company and the new Companies House identity verification rules for women directors.

4) Register for taxes and National Insurance

Once your business is registered, you must tell HMRC about your income and any relevant taxes. Sole traders and partners pay Income Tax and National Insurance contributions through Self Assessment. Class 2 National Insurance contributions were abolished from April 2024, HMRC confirmed. Class 4 contributions are payable on profits above the Lower Profits Limit; check the latest HMRC rates for 2026/27, as self-employed National Insurance has been subject to recent changes.

Limited companies must register for Corporation Tax within three months of starting to trade. The main rate is 25% on profits above £250,000, with a small profits rate of 19% on profits up to £50,000 and marginal relief in between, HMRC figures for 2026/27 show.

If your business’s taxable turnover exceeds the VAT threshold of £90,000, you must register for VAT. The threshold was raised to £90,000 in April 2024 and is frozen until April 2028, according to HMRC. You can also register voluntarily if it helps your cash flow or credibility.

If you employ staff, you must register as an employer with HMRC and set up PAYE to deduct Income Tax and National Insurance from wages. You will also pay employer National Insurance contributions on salaries above the relevant threshold.

Self-employed women with turnover above £50,000 should also prepare for Making Tax Digital for Income Tax Self Assessment from April 2026, HMRC guidance states. For a practical checklist, see our Making Tax Digital sole trader guide for 2026.

5) Get the right insurance

Insurance protects your business, your customers and your employees. Some policies are compulsory, while others are sensible depending on what you do.

• Employers’ liability insurance is a legal requirement if you employ anyone. You need cover for at least £5 million and must display your certificate of insurance, as required by the Employers’ Liability (Compulsory Insurance) Act 1969.
• Professional indemnity insurance is important if you give advice or provide professional services, as it covers claims for negligence or mistakes.
• Public and product liability insurance protects you if a customer or member of the public is injured or their property is damaged because of your business activities.
• Motor insurance is compulsory for any vehicle owned or used by the business.

Depending on your sector, you may also need cyber insurance, business contents insurance or specialist cover. Always check what your clients, regulators or trade bodies require.

6) Check licences, permits and data-protection requirements

Many businesses need specific licences or permits before they can trade legally. Rules vary by industry and location, so use the GOV.UK licence finder to check what applies to you. Common examples include food business registration, alcohol licences, street trading licences, waste carrier licences and childcare or health-related registrations.

If you process personal data, such as customer names, email addresses or payment details, you must comply with UK GDPR and may need to pay the data protection fee to the Information Commissioner’s Office. Most businesses that hold personal information must register. The fee is tiered: £40 for most micro-businesses, £60 for small and medium organisations, and £2,900 for large organisations, ICO guidance for 2026 states.

7) Understand your ongoing responsibilities

Your legal duties do not end once you are registered. If you rent or buy business premises, you may have to pay business rates to your local council and comply with planning rules, fire safety regulations and accessibility requirements. Even home-based businesses may need planning permission or must inform their mortgage lender or landlord.

If you employ people, you must:

• Register as an employer with HMRC and operate PAYE correctly.
• Pay at least the National Living Wage or National Minimum Wage. From April 2026, the National Living Wage for workers aged 21 and over is £12.83 per hour, according to Low Pay Commission recommendations adopted by the government, with lower rates for younger workers and apprentices.
• Provide a written statement of employment particulars from day one.
• Automatically enrol eligible staff into a workplace pension scheme and pay at least the 3% minimum employer contribution, with a total minimum contribution of 8% including staff contributions, as required by The Pensions Regulator.
• Provide payslips, holiday entitlement and a safe working environment.

Company directors also have statutory duties, including keeping accurate accounting records, filing annual accounts and confirmation statements with Companies House, and submitting a Company Tax Return to HMRC.

Keep good records and seek advice

Good record-keeping is essential. You must keep evidence of income, expenses, VAT records and payroll information for the required periods. Using accounting software can help you stay organised and meet Making Tax Digital requirements where they apply.

If you are unsure about any part of the process, speak to a qualified accountant, solicitor or business adviser. Getting professional advice early can save you money and stress, and help you build a business that is legally compliant from day one. For more detail on tax obligations, read our Self Employed Tax UK guide for 2026/27.

Practical action steps to take now

• Check your proposed business and brand names on the Companies House and Intellectual Property Office databases.
• Decide whether to trade as a sole trader, partnership or limited company, then register with HMRC or Companies House.
• Register for Corporation Tax, VAT or PAYE as soon as the relevant thresholds apply.
• Buy employers’ liability insurance before you hire your first member of staff.
• Confirm which licences, permits and ICO registrations your sector requires.
• Put a record-keeping system in place before you make your first sale.

Following the legal process of setting up a business UK founders need from day one gives you a solid base to grow with confidence and avoid costly corrections later.