This guide takes you through those decisions in order, from finding local support and checking premises to registering the business and getting your records in place.
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1. Test your idea and find local support
Start with three questions. Who will buy from you? What are they willing to pay? How many sales will you need to cover your costs? Include stock, equipment, insurance and deposits in your budget. If you’ll invoice customers, allow for the gap between doing the work and getting paid.
Lancaster City Council’s Business and Skills Support Hub offers free support to people starting or growing a business. Tell the team what you plan to do, where you’ll trade and which decision you need help with. It can help you explore mentoring, finance, training and premises. The council’s training and events page also points you to Boost Lancashire’s calendar for upcoming business events. Business and Skills Support Hub · Council training and events
Check funding before you spend
Work out how much you need to open and how much you’ll need to keep trading while sales build. Use the council’s funding directory or Boost Lancashire’s Business Support Helpdesk to explore options. The helpdesk covers Lancashire, while access to individual programmes can depend on your postcode and stage. Check availability and terms with the provider. If you find a grant, ask whether you need approval before paying a deposit or ordering equipment.
A government-backed Start Up Loan is a personal loan for business purposes. If you’re considering one, put the repayments in your cash flow forecast and check what you could still afford if sales take longer to build. Council finance and funding · Boost Business Support Helpdesk · British Business Bank Start Up Loan guidance
2. Check where you can trade before committing to premises
Shops, cafés and workshops
Before signing a lease, ask the landlord or agent what the property is used for and what the lease allows. Then describe your plans to Lancaster City Council’s planning team. Include customer visits, opening hours, signage and changes to the building. If you’re looking at a café, ask about extraction equipment and outside seating early. A listed building or a property in a conservation area can need extra checks. Council planning guidance for businesses · Do I need planning permission?
Work out the full cost of occupying the property. Alongside rent, ask about service charges, utilities, repairs, waste collection and fitting out the space. Check the property’s rateable value and ask the council what the business rates bill could be and whether you qualify for relief. If you’re still looking for somewhere to trade, the council publishes listings for property it manages. Council business rates relief · Council commercial property listings
Working from home or testing a market stall
If you plan to work from home, check your tenancy or mortgage terms and tell your insurer what you’ll be doing. Regular customer visits, deliveries or alterations can affect whether you need planning permission. Depending on how you use the space, you may also need to check business rates or arrange separate cover. GOV.UK guidance on running a business from home
If you want to test a product before taking on a shop, Lancaster’s Charter Market is one option to explore. Ask the markets team whether it has space for your type of goods, what a pitch would cost and what documents you would need. Use those figures to work out how many sales would cover stock, fees, travel and your time. Lancaster Charter Market · Council information for traders
Licences and food registration
Check permissions for what you’ll do as well as where you’ll do it. If you plan to sell alcohol, ask the council what authorisation you need. The process can differ for a temporary event and a permanent venue.
Most food businesses must register with the relevant council at least 28 days before trading. This can include businesses run from home, online, from a stall or from a mobile unit. Some food operations need approval, so check with the council early if you’re unsure which rules apply. GOV.UK licence finder · Lancaster premises licensing · Lancaster food business registration
3. Choose a business structure and register
Think about who will own the business, who will sign contracts and who will be responsible for its debts. If you’re starting with someone else, agree how you’ll share costs and profits, make decisions and handle one person leaving. Our guide to sole traders and limited companies explains the main differences.
Sole trader or ordinary partnership
For a sole trader, £1,000 of gross trading income in a tax year is a useful starting point. Add together the income from all your trades before taking off expenses. If the total is over £1,000, you’ll generally need to tell HMRC about your trading income through Self Assessment. Whether you owe tax depends on your taxable profit and your wider circumstances.
If gross trading income is £1,000 or less, the trading allowance may cover it in full. Check whether you need to file if the allowance is unavailable to you, you want to claim a trading loss or you have another reason to submit a return. For example, the allowance cannot be used for trading income from your employer. HMRC trading allowance guidance · Who must send a tax return
If you need to notify HMRC that you’re liable to tax and HMRC has yet to ask you for a return, the usual deadline is 5 October after the end of the tax year. Registering for Self Assessment is the usual way to tell HMRC if you’re new to it. If you already file for another reason and need to register as a sole trader, follow HMRC’s sole trader registration process using your existing Self Assessment details. HMRC sole trader registration
For example, if you start in November 2026 and need to notify HMRC for 2026/27, the usual deadline is 5 October 2027. The usual deadline to file online and pay any tax due is 31 January 2028. Our guide to registering as self-employed takes you through the process. Self Assessment deadlines
For an ordinary partnership, choose a nominated partner to register the partnership with HMRC and deal with its tax return. Each individual partner must also tell HMRC they’ve become a partner and report their share on their own Self Assessment return. Limited partnerships and limited liability partnerships have separate registration requirements. GOV.UK partnership guidance
Limited company
Incorporate with Companies House before you trade through the company. You’ll need details such as the registered office, directors, shareholders and people with significant control. New directors verify their identity and provide their Companies House personal codes for incorporation. An individual person with significant control must also link their verified identity to that role. If someone holds both roles, check when and how to supply the code for each. Companies House incorporation guidance · Identity verification deadlines
When the company becomes active, check whether HMRC has already been told. If the company is within the charge to Corporation Tax and you still need to tell HMRC, do so within three months of the start of its Corporation Tax accounting period. Diary the company accounts, confirmation statement, Company Tax Return and Corporation Tax payment separately. Tax can be due before the return has to be filed. HMRC guidance on when a company becomes active · Company accounts and tax deadlines · Confirmation statements
4. Set up your records and watch for tax thresholds
If you incorporate, keep the company’s banking separate from your personal banking. An account in the company’s name is the usual way to do this. If you’re a sole trader, a dedicated account makes it easier to see what the business earns and spends. Check that the bank’s terms allow business use.
Keep invoices, receipts and bank records from the start. Each week, match payments to invoices and follow up overdue amounts. Each month, check whether expected receipts will cover upcoming bills and the money you’re setting aside for tax. Self-employed records usually need to be kept for at least five years after the relevant 31 January filing deadline. Companies generally keep accounting records for six years from the end of the financial year they relate to. Business set-up and banking · Self-employed record retention · Company accounting records
VAT registration
For most UK businesses, the VAT registration threshold is more than £90,000 in taxable turnover. Zero-rated sales count towards the threshold. VAT-exempt sales generally do not. There are two checks to make.
- Look back. At the end of each month, check your taxable turnover for the previous 12 months. If it has gone over £90,000, apply within 30 days of the end of that month. Registration normally takes effect on the first day of the second month afterwards.
- Look ahead. If you have reasonable grounds to expect to make more than £90,000 in taxable sales in the next 30 days alone, apply by the end of that period. Registration takes effect from the date you first had grounds to expect you’d go over.
Check the forward test before pricing a large order, particularly if much of the work will be supplied within 30 days. You can owe VAT from your effective registration date even if your original price didn’t allow for it. Once registered, you’ll generally need to account for VAT on taxable sales and file VAT returns. Our VAT registration guide explains the tests and voluntary registration. HMRC VAT registration rules
Making Tax Digital for Income Tax
HMRC uses qualifying income from your Self Assessment return to work out when you need to use Making Tax Digital for Income Tax. It generally combines gross income from your sole trades and property businesses before expenses. The rollout began on 6 April 2026 for qualifying income over £50,000 on the 2024/25 return. The next stages are 6 April 2027 for income over £30,000 on the 2025/26 return and 6 April 2028 for income over £20,000 on the 2026/27 return.
If you start your first sole trade in November 2026 and have no existing property business, you’ll normally report the trade on your 2026/27 return first. If you’re still trading, your qualifying income for that year is over £20,000 after any adjustment and no exemption applies, you’ll generally need to use Making Tax Digital from 6 April 2028.
Where qualifying income relates to a period other than 12 months, it is normally adjusted in proportion to the period’s length. This is known as annualising the income. If a proportional adjustment would give an unreasonable or unjust result, the rules allow a just and reasonable adjustment. HMRC says it annualises sole trader income where it has the information, so check what period your figures cover before relying on the amount you received in your first few months. HMRC start dates · Qualifying income
If you already earn rental income or run another trade, an earlier return may bring those sources into Making Tax Digital sooner. If you’re already using it and start a separate trade, keep reporting your existing income sources as usual. You’ll normally include the new trade in your tax return before digital records and quarterly updates become compulsory for that trade. HMRC guidance on adding a new income source
Our Making Tax Digital guide explains what digital reporting involves. If you think an exemption may apply, including for digital exclusion, check the conditions with HMRC. MTD exemptions
5. Prepare before taking on staff
Before agreeing a start date, check the person’s right to work, the minimum wage for their circumstances and your workplace pension duties. Budget for employer National Insurance and pension contributions where applicable. Most employers need employers’ liability insurance when they take on staff. Check whether your trade, lease or market operator requires other cover.
If you need a PAYE scheme, register with HMRC before the first payday. Allow time to receive your employer references, set up payroll and collect the employee’s starter details. Our guide to taking on your first employee walks through the first payroll. GOV.UK first hire guidance · HMRC employer registration · Employers’ liability insurance
Start-up checklist
- Test your idea and budget for opening costs and the first few months of trading.
- Contact the council’s support hub and check funding terms before spending.
- Check premises, business rates, planning, licences and any food registration.
- Choose a business structure and complete the registrations that apply.
- Arrange suitable banking and insurance.
- Start keeping records and diary tax deadlines, VAT checks and digital reporting dates.
- Check employment duties before taking on staff and set up payroll if needed.
How accountancy advice can help
Getting advice early can help you compare business structures, understand when tax and filing deadlines will fall and choose a way to keep records that suits how you trade. Those decisions are easier to make while you’re still planning prices, cash flow and how you’ll pay yourself.
At Baldwin’s Accountancy Services, we work with start-ups from our office in Hest Bank, Lancaster. If you’re unsure whether to start as a sole trader or set up a company, we can talk through what each option would mean for you. We can also help with company formation or getting your bookkeeping in order. Get in touch and tell us what you’re planning and where you’d like a hand.