6 tips for building a solid business foundation

Most problems in young businesses do not come from a bad idea. They come from small things left undone at the start: mixed bank accounts, missed deadlines, no written agreements. Here are six steps that give a new UK business a stable base to grow from.

1. Choose the right structure

The main options are sole trader, partnership, limited company and limited liability partnership (LLP). A limited company is a separate legal person, so the business's debts are normally the company's, not yours. It also has more paperwork: annual accounts, a confirmation statement and Corporation Tax returns.

There is no single right answer. It depends on your income, your risk, whether you will bring in partners or investors, and how customers see you. See our company formation page for how a limited company works, and speak to an accountant about the tax side for your situation.

2. Separate business and personal money

Open a business bank account as soon as you start. For a limited company this is essential, because the company's money is not your money. Taking cash out without recording it as salary, dividends or a director's loan creates tax problems.

Simple habits help:

• pay all business costs from the business account;
• keep receipts and invoices, digitally if possible;
• use bookkeeping software from the start rather than catching up at year end.

3. Know your deadlines

Every limited company has the same basic calendar:

• register for Corporation Tax within 3 months of starting to trade;
• file a Confirmation Statement at least once every 12 months;
• file the first accounts within 21 months of incorporation, then within 9 months of each year end.

Since 18 November 2025, every new director and person with significant control (PSC) must also verify their identity with Companies House. Put these dates in a calendar on day one. Late filing penalties are avoidable costs.

4. Protect your name, address and ideas

• Name: check your name is free before you register it, and consider a matching domain and social media handles.
• Address: your registered office and director service address appear on the public register. If you work from home, a separate Registered Office Address keeps your home address private.
• Ideas and brand: consider whether you need a trade mark for your brand. Speak to an adviser if your business depends on intellectual property.

5. Write a simple plan

You do not need a 40-page business plan. A one or two-page plan that answers these questions is enough to start:

1. Who is your customer and what problem do you solve?
2. How will customers find you?
3. What will you charge, and what will each sale cost you?
4. How much money do you need to reach your first customers, and where will it come from?
5. What will you measure each month?

Review it every few months. A plan is useful because it makes you test your assumptions.

6. Put agreements in writing

If you start with a co-founder, agree in writing who owns what, who does what and what happens if someone leaves. A shareholders' agreement (for a company) or a members' agreement (for an LLP) avoids many disputes. Use written terms with customers and suppliers too, even short ones.

Bonus: get advice early

An hour with an accountant at the start usually costs less than fixing mistakes later. Ask about salary and dividends, VAT registration, expenses you can claim and how to keep records.

How Form My Company can help

We set up UK limited companies and LLPs with everything you need to start correctly. Our Digital Package costs £290, including the Companies House fee, VAT and HMRC Corporation Tax registration. As a Companies House ACSP, we verify your identity for you, remotely, as part of your order. Want privacy from the start? The Privacy Package at £1,000 adds a registered office and director service address for the first year.

Frequently asked questions