How to Set Up an Online Business in the UK: 2024 Guide

Online business has become a popular industry in the UK. The International Trade Administrator mentioned that the UK has become the third-largest e-commerce globally, with the US and China leading the pack. 

In fact, by 2025, e-commerce sales in the UK are projected to expand at an average yearly pace of 12.6%. In addition, the UK also has a massive online shopping behaviour. 

Statista reported that more than 80% of people in the United Kingdom (UK) shop online, or more than four out of five UK customers use digital platforms.

These data show that starting an online business in the UK can be profitable for you. Yet, if you plan to establish an online business in this country, you should know how to set up an online business UK. 

Below are the steps on how to start a business online in the UK you should take note of. 

How to Set Up an Online Business UK

Understanding how to start an online business from home, especially in the UK, will benefit you in terms of time and cost. Since the growth of online businesses in the UK is huge, you need to compete with other businesses for higher revenue. 

Then, how to set up an online business UK? Here are the steps you need to pay attention to.

1. Conceptualize Your Business

The first step on how to set up an online business UK is to conceptualize your business. You should gather all the ideas, from the products you will sell to how much funds you should prepare. 

In this case, you can do market research and analysis on marketing strategy so that you have a solid business plan. 

Equally important to business planning, you should choose a business model as the base of your company. 

By knowing what kind of business model you should take, you can decide what kind of product you can sell and what kind of audience you can target. Below are 4 business models you can choose from:

• Business to business (B2B): B2B requires you to sell products to other businesses. This kind of business plan is especially attractive to companies who produce their goods as it's perfect for handling big order quantities at once. An example of B2B is an online web development business. 
• Business to consumer (B2C): B2C requires you to provide products for customers. This model is the most common online business model, especially e-commerce. An example of B2C is an online dropshipping business. 
• Consumer to business (C2B): C2B is suitable for individuals who provide services to businesses, like online freelance.
• Consumer to consumer (C2C): C2C applies to a business between consumers, like selling stuff on eBay. 

2. Choose a Name and Business Entity

The next step of how to set up an online business UK is choosing a name and business entity. Select a name for your e-commerce company that isn't too close to one that already exists. A distinctive name may help you create a distinctive brand image.

Additionally, it shouldn't be very lengthy because long company names are hard to remember and confusing; therefore, they don't always work well. Moreover, the business name must be appropriate for a website URL. 

Next, you can choose a business entity for your online business. You can choose one of the legal statuses below:

• Limited Liability Company (LLC): In this entity, investors' assets are safeguarded, and your firm will operate like a private enterprise. The amount of money you invest in the firm also affects your liabilities.
• Sole trader: You will bear all responsibility for the gains and losses incurred by your online business. 
• Partnership: Different from sole trader, you will work and share profits with another business partner.
• Limited Liability Partnership (LLP): In contrast to partnerships where you join finance on your own, this entity separates the company and personal finances.

3. Register Your Company

Now, your business plan is ready. Next, one of the steps to take when starting an online business is registering your company. You can sign your company up online on GOV.UK and you can wait for 24 hours. 

On the other hand, if your business entity is an LLC or LLP, you can register your company with Companies House. 

Please note that postal registration is required if you wish to avoid having "limited" in your business name. 

4. Gain Intellectual Property Protection

Next, you should prepare legal requirements for starting an online business UK, such as intellectual property protection. Below are what you need to apply for your online business:

• Designs and Patents Protection: If your online business has original designs or ideas, think about applying for patents or design protection. By doing this, you'll be granted exclusive rights to your innovations and creations, making it illegal for anybody else to copy or use them.
• Copyright Protection: Original creations like photos, movies, and content from websites are automatically protected by copyright. However, it is necessary to place a copyright notice on your website to state your rights and protect them against exploitation.
• Trademark Registration: You should register the business trademark with the UK Intellectual Property Office (IPO). Yet, before registering, ensure that your trademark does not exist for other businesses in the UK. 

5. Apply for Tax

The next step of how to set up an online business UK is to apply for tax. Taxes and other financial requirements must be carefully considered while running an online business.

Below are some of the taxes commonly charged for online businesses. 

• Income Tax and National Insurance Contributions: You must be aware of your responsibilities as a business owner about income tax and National Insurance (NI) payments. Should you do business as an individual, income tax will be imposed on your earnings.
• Value Added Tax (VAT): You might have to register for VAT depending on your revenue. You must register for VAT and impose the tax on relevant goods and services if your taxable turnover is above the existing level. It is still optional to register for VAT if your turnover is below the threshold, but it could still be advantageous for your company.
• Business Expenses and Record-Keeping: For taxation purposes, you must keep accurate records of your online business's revenue and outlays. To support your financial records, you should keep receipts and invoices separate from your personal bank account. 

Conclusion

Those are five ways how to set up an online business UK. It can be concluded that understanding how to set up an online business UK is essential before establishing one.

Equally important, you should determine the best marketing approach for your business to market your business well. Since you open an online business, gaining online visibility on search engines will be beneficial for you.

Having a great online presence will make it easier for your potential customers to find your business. 

In this situation, SEO could be necessary to advertise your company on search engines. You can increase your internet visibility and draw in more potential clients by using SEO.

Additionally, by producing excellent content that is optimised for search engines, you may target potential clients with pertinent keywords, increasing website traffic and income.

Get in-depth and professional SEO Services from cmlabs to help you create top-notch content and optimise your website immediately!