How to register a small online business in the UK: beginner checklist

By FastBuySale Newsroom · 9 Nov 2026 · 44m ago

What this checklist covers

Starting an online business in the UK is relatively simple, and many people begin by selling on marketplaces, social media or their own website from home. But there are registrations, tax rules and consumer laws to follow, and getting them right early avoids penalties and stress later. This beginner checklist walks through each step in order. It summarises the general rules for England, Scotland, Wales and Northern Ireland, though some details differ. Rules and thresholds change, so check official government guidance before relying on any figure here.

1. Decide whether you are trading

Selling your own unwanted belongings occasionally is usually not trading and not taxable. Buying goods to resell at a profit, making items to sell regularly, or selling services online usually is. HMRC looks at factors such as how often you sell, whether you buy to resell and whether you aim to make a profit. If you are trading, the rest of this checklist applies.

2. Check the trading allowance

The trading allowance lets you earn up to 1,000 pounds of gross trading income in a tax year without registering or paying tax on it. If you earn more, you need to register. You can choose to use the allowance instead of claiming actual expenses, which suits very low-cost side businesses. Above the allowance, claiming actual expenses is usually better if your costs are significant.

3. Choose a business structure

Most small online businesses start as sole traders, because it is quick and has little paperwork. You and the business are legally the same, so you are personally responsible for debts. A limited company is a separate legal entity, which limits personal liability, but it involves more administration: annual accounts, a confirmation statement, Corporation Tax returns and director responsibilities. Some people start as sole traders and incorporate once profits grow.

4. Register as a sole trader

Sole traders register with HMRC for Self Assessment. You must register by 5 October after the end of the tax year in which you started trading. You then file a tax return by 31 January after the end of the tax year and pay Income Tax and National Insurance on your profits. Making Tax Digital for Income Tax is being introduced from April 2026 for sole traders and landlords with qualifying income above set thresholds, starting at 50,000 pounds, which means keeping digital records and sending quarterly updates.

5. Or register a limited company

You can incorporate a company online with Companies House. You will need a company name, a registered office address, at least one director and shareholder, and details of people with significant control. Directors and people with significant control must verify their identity with Companies House. Once incorporated, register for Corporation Tax with HMRC within three months of starting to trade.

6. Choose a business name

Sole traders can trade under their own name or a business name, but names cannot include sensitive words without permission or be offensive, and they must not mislead people into thinking you are connected to another business. Company names must be unique on the Companies House register. Check trademarks to avoid infringing someone else's brand, and consider registering your own trademark with the Intellectual Property Office.

7. Open a business bank account

Limited companies need a separate business bank account. Sole traders are not legally required to have one, but keeping business and personal money separate makes records much easier. Compare fees, card payment features and integration with accounting software.

8. Set up your shop and payments

Choose where you will sell: marketplaces, social media shops or your own website. Each has its own fees and rules. Use a reputable payment provider and display prices clearly, including VAT if you are registered. Make delivery costs and times clear before checkout.

9. Follow online selling rules

Consumer laws require online sellers to provide clear information about who you are, your contact details, the main features of the product, the total price including taxes and delivery, payment and delivery arrangements, and the right to cancel. For most goods sold at a distance, consumers can cancel within 14 days of receiving them and receive a refund within 14 days of returning them. Some items, such as personalised goods and perishable items, are exempt. Goods must also be as described, of satisfactory quality and fit for purpose.

10. Protect customer data

If you collect names, addresses, emails or payment details, you must follow UK data protection law: keep data secure, use it only for stated purposes and have a privacy notice on your website. Many businesses that process personal data must pay the data protection fee to the Information Commissioner's Office unless an exemption applies. Marketing emails generally need consent.

11. Check product safety rules

Products sold in the UK must be safe. Certain products, such as toys, cosmetics, electrical goods and food, have specific rules on labelling, testing and markings. If you make or import products, make sure you understand your responsibilities. Selling to customers in Northern Ireland or the EU can bring extra rules.

12. Food and other licences

If you sell food made at home, you must register as a food business with your local council at least 28 days before you start trading and follow food hygiene rules. Some other activities, such as selling alcohol, need licences.

13. Register for VAT when needed

You must register for VAT if your taxable turnover exceeds 90,000 pounds in any rolling 12-month period, or if you expect it to exceed that in the next 30 days. You can register voluntarily below the threshold, which can make sense if you sell mainly to VAT-registered businesses.

Worked example: watching the VAT threshold

Ella's online stationery shop has monthly sales that rise steadily. At the end of May, her sales for the previous 12 months total 86,000 pounds. In June she sells 6,000 pounds. June of last year, which now drops out of the rolling period, brought in 1,000 pounds, so her new rolling 12-month total is 86,000 minus 1,000 plus 6,000, which is 91,000 pounds. She has passed the threshold and must register within 30 days of the end of June. Checking her rolling total each month helps her avoid late registration penalties. The percentage calculator on this site helps her see how VAT would affect her prices.

14. Platform reporting

Online marketplaces now report information about sellers to HMRC, including sales income, once sellers pass reporting thresholds. Sellers who are trading should register and report their income anyway; the reports simply help HMRC check.

15. Get insurance

Public liability and product liability insurance protect you if a product causes injury or damage. Professional indemnity suits service businesses. Home insurance may not cover business stock or equipment, so check your policy.

16. Keep records

Keep records of sales, purchases, expenses, invoices and bank statements for at least five years after the 31 January submission deadline for sole traders, and six years for companies. Accounting software makes this easier and prepares you for Making Tax Digital.

17. Plan your pricing

Work out your full cost per item, including materials, packaging, postage, platform fees and payment fees, before setting prices. Many new sellers forget fees and returns and end up with very thin margins. Add a margin for your time and for future VAT if you expect to grow past the threshold, since adding 20 percent later can be hard.

18. Know your deadlines

Key dates include the 5 October Self Assessment registration deadline, the 31 January filing and payment deadline, quarterly VAT returns if registered, and company accounts and confirmation statements for limited companies. Put them in a calendar with reminders.

19. Get help when needed

Free guidance is available from official government business support services, and an accountant can help with structure and tax once your business grows.

Reader questions

Have a question about starting a business in the UK? Send it through the Ask page on this site.

Disclaimer

This article is for general information only and is not legal or tax advice. Rules and thresholds change; check official government, HMRC and Companies House guidance for current information.

💬 Join the discussion on this article →

More in News · Trending News · Browse local deals