The Boring But Essential Things You Should Know Before Starting a Business
I’ve started, run and sold two businesses. Now that I’ve started my third, In The Field AI, a question I get asked a lot is what is actually involved in starting a business. It’s a question that seems to completely stump a lot of people, and for a while I couldn’t understand why because I’ve always just figured it out as I’ve gone. But it’s got me thinking recently that just because I did it by muddling through, doesn’t mean anyone else has to.
The early days can be completely overwhelming, and it’s sometimes hard to know what the next thing on the list should be, especially when everything seems to be the most important thing. Having been there, and felt that overwhelm on more than one occasion, I decided to write a guide to help anyone who is feeling that itch to work for themselves. I’ve laid out all of the essential things you need to put in place at the start (don’t worry, it’s not as many as you think, and it’s all really straightforward). Please note that I’ve written this as a generalised guide - for things like childcare or homemade baked goods you need to contact your local council as the rules are very specific.
Registering with HMRC
HMRC or His Majesty’s Revenue and Customs, to give it the full title, is the UK’s organisation in charge of collecting taxes, including the tax that self-employed people need to pay on their earnings. The process of collecting taxes from the self-employed is called ‘Self Assessment’, and the current threshold for registering for Self Assessment is £1,000 per year (this can and does change, so check the threshold if you’re reading this after April 2027). The £1,000 threshold is in addition to any employed work, so if you earn £25,000 per year working for another business and you have a side-hustle that brings in £1,001 or more within the same tax year (a period between the 6th April in one year, and the 5th April the following year) you need to tell HMRC about it.
Registering is easy, you simply head to the HMRC website (there is a link at the bottom of this blog) and click on ‘Register for Self Assessment.’ One word of warning, there is an abundance of scam and not-so-scam sites dedicated to trying to take your money, all based on looking a little bit like the HMRC or official tax advice websites. Always check that the web address in the address bar ends with ‘.gov.uk’ before handing over any of your personal details - only official British government websites have the .gov.uk ending.
Your yearly tax bill is calculated in arrears, which means that you give your final figures for one tax year in the following tax year, and there is a generous amount of time allowed for you to get that final self assessment in - if your tax year ends in April 2026 you have until January 2027 to file your return. And that brings me to MTD, which I’ll explain next.
Making Tax Digital
If you’re only just thinking about starting your own business, you may not have heard of MTD, or Making Tax Digital. It’s a new way that the government wants self-employed people and landlords to input their income and outgoings four times a year, in addition to their final figures tax return at the end of that financial year. As this is a brand new system there is a sliding scale of who needs to register for MTD and when, based on turnover. Currently thresholds are as follows:
£50,000 and over - MTD from April 2026
£30,000 and over - MTD from April 2027
£20,000 and over - MTD from April 2028
These figures are for the total amount of money your business turns over in a year rather than the total amount of profit you make, so the 2028 threshold is going to include pretty much everyone with a small business or profitable side hustle.
MTD updates need to be filed four times a year with HMRC compatible software, and the deadlines for each filing are 7th August, 7th November, 7th February and 7th May. Updates four times a year on special software sounds complicated and expensive, but it’s actually free and pretty straightforward (I know this because I filed my first update in July this year). You need software which connects your business bank account to your HMRC account, and that brings me neatly to the next thing that should be on your list.
Opening a Business Bank Account
You don’t need a business bank account from the word go but it makes life so much easier if you do have one, and with so many free business accounts on offer, there is no excuse not to get one these days. You don’t need a business name to open it - you can use your own name. There are many options available, and some of them come with Making Tax Digital compliant software included so that you’re ready to send in quarterly updates to HMRC as soon as you reach the threshold.
I have a free tier Monzo business account which lets me designate specific categories for income and payments, such as inventory, marketing, income, refunds, sales and so on. It’s super easy to use and my first MTD update was just pressing a button and the Monzo software did the rest. If you’re stumped by the many choices available, my advice is go for a free account, go for one that is easy to set up (and that doesn’t involve trekking to the nearest town branch for a meeting with a bank manager), and go for an account with built in MTD software. You may not need it until 2028, but you also may need it far sooner than expected, so if it’s there, set up ready and waiting, it’s one less thing to worry about.
Having a business account isn’t just about keeping HMRC happy (though it’s something I would always advise you try and do as standard). A business bank account that is separate to your personal bank account makes budgeting so much easier too. You can pay yourself a wage, pay into a pension from your business (don’t forget to claim personal tax relief for your pension payments) and keep all of your business expenses separate.
GDPR and Data Protection
This is something I bang on about regularly, not because it’s at all interesting (though I find it fascinating) but because it’s something that very many freelancers and sole traders know nothing about, and they really should. GDPR or General Data Protection Regulation, is the catch all for protecting other people's personal information - names, addresses, phone numbers, email addresses, financial information, and so on, from getting out into the public domain. If you handle, or are likely to handle, a person's personal data in the course of running your business, you need to be aware of the rules, have a way to store the data securely and a reason for needing to store that data in the first place. You also need to have a system to safely delete that data after a certain period of time, and you need to tell your clients clearly the process you use to do so. In addition, if that client doesn’t want you to keep or store their information, you need to agree to delete it in a timely and safe way.
As well as knowing what you can store, making sure you store it safely, and having a system in place to delete older details and those of clients who don’t want you keeping their details, you also need to register with the ICO or Information Commissioner’s Office, which may include a small registration fee, payable yearly. There is a questionnaire you can take to find out whether or not you need to register and pay the fee. I've included a link at the end of this guide. I have also written a blog all about GDPR and using AI, which you can find here: GDPR & AI
Insurance - Boring but Necessary
Any work you do that involves other people’s money, property or time pretty much always needs some kind of insurance to cover you if things go wrong. There are three main types, and the type you need depends on what you actually do.
Public Liability Insurance: you need this cover if you do anything in anyone else’s home, garden, business or venue. You also need this if clients visit your home or premises.
Professional Indemnity Insurance: you need this if you provide services to clients, including financial, legal and professional advice, that could result in them losing money (In The Field AI has professional indemnity insurance, for example).
Product Liability Insurance: you need this if you make things to sell or you resell items that could cause an injury or illness to the person who bought that item.
There are various other types of insurance such as business interruption, building and equipment insurance that you may need to take out. One that is worth checking is your car insurance. If you insure your car on a standard private policy, you may not be covered if you use your vehicle on a commercial basis - transporting stock to trade shows and markets, visiting clients, taking equipment to work sites and so on. It is worth checking this sooner rather than later, because insurers like nothing more than to wriggle out of paying up.
It is always worth shopping around for insurance, unfortunately there isn’t a Money Saving Expert for sole traders, so you need to do your own due diligence here. Make sure you have the correct type of insurance and get at least three quotes before you commit. There is more government information on insurance that I’ve linked to at the end.
What About a Website?
This is something that I get asked a lot, and I pretty much always say yes in reply. The main reasons are - a website is your shop front to the world where you can show off how wonderful you and your business are. A website means that you, the one-person band, can compete on a much more even playing field with the big guys out there, and even beat them at their own game. A website also means that you get your own email address rather than relying on Gmail or Outlook, which is always a nice professional touch.
There are a couple of caveats of course - your website must look professional and well thought out, without spelling errors or a messy layout. Your website must be easy to navigate, with clearly labelled and easy to find page links. And finally, your website must work - broken links, forms that don’t send, incorrect phone numbers (this happens more than you think) are all signs that portray the person in charge as someone who doesn’t care. And if they don’t care about their own business, they’re unlikely to care about their clients.
To get your own website you firstly need to buy the domain name, like inthefieldai.com or hmrc.gov.uk. These usually cost £10-£30 per year to buy and renew either yearly or every two years. Be careful when you search for your preferred domain - there are a lot of scam sites out there. I’ve bought several domains through UK2.net who are reputable, and have great customer support.
Once you’ve got your domain you can get the website. Don’t spend a fortune here, I would say an absolute maximum of £500 for the first year, to include the build, SEO and hosting. If you don’t have a spare £500, or even £200, you can try the DIY route. There are sites that let you build a free site. So if you only want something simple and you’re willing to put the work in yourself give one of the free ones a go.
The Basic Systems
One thing I’ll say about my muddle through method of starting a business, is that you’re always playing a bit of catch up from the word go. Getting some straightforward systems and workflows in place right at the start is by far the easier way. I’m not talking about AI agents or virtual assistants, just an invoice template, a booking system for work coming in and a sales ledger so you can keep a track of who has paid what, when and what is still outstanding. Doing a headless chicken impression every day because you don’t know where the latest enquiry came from or you have no idea who owes you money is exhausting and frustrating.
I’ve got fully functional invoice templates in the digital download section of my website, or you can design your own in Word or Docs pretty easily if you’re handy with tables and formatting. At the minimum it needs to say who you are, where you are and how you should be paid. I would also recommend getting a dedicated work diary, even if you use the basic one on your phone. Keeping track of where you need to be and when so you don’t let clients down, especially in the early days when you’re still building your reputation, is vital.
I hope you feel more confident about striking out on your own now you’ve read my guide. Working for yourself is brilliant, it can also be exhausting and scary, but the rewards pretty much always make up for the bad bits. And don’t let anyone tell you that you can’t, that you’re not capable or good enough.
I’ve created a Start-Up Check List to keep you on track and help you to remember all of the little things that are so easy to forget when you’ve starting a new business. You can find a link to that and other free guides and workflows on my Resources page.
If you feel you need more help than this guide provides please do have a look at my Start Up Health Check service. It’s designed to help take the pain and overwhelm out of starting a business, and get you set up on a good footing going forward. Check it out today, and please do get in touch if you have any questions about this guide, or what I can do to help people like you. I always love getting feedback on my guides and blogs and I’d be very happy to hear from you. The link to the Health Check is here Start Up Health Check
Useful Links
HMRC Self Assessment - https://www.gov.uk/self-assessment-tax-returns/registering
Making Tax Digital -https://makingtaxdigital.campaign.gov.uk
ICO for GDPR - https://ico.org.uk/for-organisations
HM Govt Insurance Advice - https://www.business.gov.uk/support/regulations-and-licensing/insuring-your-business/