How much does it cost to start a business in the UK?

Learn how to calculate your costs before you start a business in the United Kingdom

Before you launch a business in the UK, it’s crucial for you to be aware of your startup costs.

Not only will you need to be aware whether you have enough to launch properly, but a good awareness of your startup costs will make you more aware how much your business will need to make each month to succeed.

With an accurate estimate of your launch costs written in your business plan, this can give you and your investors added confidence in your business finances. This is key, especially when you consider the high proportion of new businesses that fail within a couple of years of launching.

Below, we’ll explore a comprehensive list of costs that businesses may face when launching, and some tips for calculating an estimate.

The different types of costs

It’s important to bear in mind that businesses are likely to face:

  • One-off costs and ongoing costs
  • Fixed costs and variable costs
  • Essential costs and optional costs.

That means calculating your startup costs will give you an idea of your ongoing running costs too.

Research costs

Most business owners will complete some form of market research to validate their business idea and see if there’s a demand for their product or service.

There are free ways to research your business idea, such as searching the web or studying the success of competitors.

However, you may find it necessary to dive deeper by paying for consumer surveys (roughly £100 per survey) or access to an online consumer database (up to £8,000).

It’s typically a one-off cost, although many business owners will want to complete more research as their company evolves.

Equipment costs

This includes all the equipment you need to create your product or offer your service.

That’s a one-off cost initially, but you’ll also need to repair, replace or upgrade your equipment over time.

Software and licences

If you need computers to run your business, you may have to pay for various pieces of software and licences too.

A lot of business software charges monthly fees. You may have to pay more to host it on multiple computers.

Registration fees

If you’re setting up as a sole trader, there will be no registration fees.

However, if you’re setting up as a partnership or a limited company, you’ll pay a fee to incorporate. This costs a one-off fee of up to £100, depending on your incorporation method.

Business premises

The ongoing cost of renting office or shop space is likely to be one of your biggest ongoing monthly expenses. Rental costs can vary tremendously depending on the size of the premises you’re renting, and the city you’re based in. Convenience of access also plays a significant role when it comes to rental costs. You’ll pay more for a shop in the city centre, compared to a similar-sized one on the outskirts of town, for example.

You can find the average costs for office space in various UK cities published online, priced per square metre per month. Prime space in central London could cost as high as £100 per square metre per month, but you’ll typically pay a lot less in smaller cities.


Branding comprises everything from the design of your logo, website, uniforms and your shop front to all forms of marketing.

It’s arguably crucial to hire a professional branding agency or freelancer to do this, if you want your business to look like the real deal.

This one-off fee might cost you thousands, or even tens of thousands of pounds, depending on the experience of the professional you hire, and how much you need designed.

Professional services

As much as you may want to set up and run every part of your business yourself, it’s likely some tasks are beyond your scope of expertise.

So, rather than work it out yourself, you may want to pay a professional to assist with your financial, legal or technological needs. You may also want to pay for business mentorship to ensure you don’t make any basic mistakes during your first months as a business owner.

Most of these experts will charge an ongoing monthly payment for their services

Business insurance

As a business owner, you’ll want to protect yourself with various insurance policies, including buildings and contents insurance, professional indemnity insurance, public liability insurance, employer’s liability insurance and more.

You can learn more about how these types of policies differ in our comprehensive guide to business insurance.

Typically, you’ll pay your insurance premiums monthly or annually.


If you’re hiring employees, you may choose to advertise your vacancies on various online and offline job boards. The most suitable places to advertise your positions are likely to charge an advertising fee. These fees vary wildly, so make sure to research which websites are likely to deliver the best-quality leads for your investment. This applies whether you’re advertising full-time roles or hiring freelancers and temporary workers.

If you choose to hire a recruitment company to find you the best candidates, you’re looking at a one-off fee totalling hundreds or even thousands of pounds per hired employee.


If you’re paying wages to employees, you’ll want to invest in payroll software to automate their payslips. Payroll software also ensures the correct deductions are made for tax and pension contributions, among other fees.

You’ll usually face a monthly cost for most payroll software, which will typically cost more, the more employees you have.

How to calculate your business startup costs

This is no mean feat.

For each of the categories above, you’ll need to find an estimate price. You can do this by searching online, getting a quote from the vendors, or by asking for advice from other business owners in your field.

Jot down all your cost estimates in a spreadsheet, making sure to divide them into one-off and ongoing costs.

You will find your launch cost by adding your one-off costs to your first month’s costs.

Bottom line

It’s difficult to find an exact answer for your startup costs before you launch. Often, unexpected charges will pop up as your launch continues.

Still, this guide should help you to calculate a reasonable estimate for starting a business in the UK.

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