The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.

Average cost to start a business in the UK

Starting a business in the UK can be expensive. Costs can quickly pile up, from professional services like accountants to hiring business premises and marketing your new business.

But the costs you will face vary widely depending on both the industry you’re getting into and the area you’re setting up in.

It’s not just a matter of getting the start-up cash together though. The Office for National Statistics (ONS) says only 42.5% of businesses are still running after 5 years, so you must figure out the long-term costs involved with starting a business. What is the average cost to start a business in the UK? Let's take a look. And if you need help paying for all of these expenses, have a look at our article on how to fund a new business.

Start-up business costs

When looking to start up a business, there are lots of different costs you need to consider. From professional services such as accountancy to marketing and business insurance. Below, we’ll go through some of the most common costs for new businesses.

How much does it cost to register a business?

First thing first, when starting a new company there’s a fee to incorporate your business to make it a legal entity. Depending on the type of business you’re setting up, this will likely mean registering as a limited company with Companies House.

Although it only costs £12 to do it yourself, many new entrants will use the services of an ‘agent’ to do this instead. Doing it this way means you don’t have to worry about the paperwork and getting it right. While this can also be cheap, it could cost upwards of a hundred pounds or so.

Business premises

Your business property will likely be one of your biggest expenses when starting your new company. Unless you plan to work from home, renting an office space, warehouse or something similar can set you back thousands in your first year.

In fact, according to research by Lloyds bank, business premises can cost up to 25% of a new business’ first-year budget—approximately £2987. This could be slightly higher with some good business insurance to help protect your investment.

Like with all property, it depends hugely where you are based as some areas are significantly more expensive than others, and vice versa. The cost of offices in the UK could set you back around £67 per sq ft in Cardiff, £78 in Edinburgh, £63 in Belfast, and up to £188 per sq ft in the West End of London.

With business property being such a drain on your initial costs as a new business, it’s worthwhile considering working from home if you can to save costs. But still, there will be costs for equipment and stock regardless of where you’re physically working.

Equipment and stock

Equipment and stock can both be a drain on your cash at first, but they’re an essential expenditure. All businesses will need equipment—whether that’s computers, software, hardware, tools or manufacturing equipment. If you’re a consumer-facing business selling physical goods, then of course you’ll need to consider stock. Naturally, this will depend highly based on what you’re selling so it’s difficult to make an estimate, but you should shop around to get the most cost-effective option.

While these costs can fluctuate, a release from Lloyds bank showed that a new start-up business can spend 20% of their budget on IT and technology alone—around £2,426. Seeing how you could cut corners to save on these big costs should be something you consider.


While some less marketing-savvy entrepreneurs may not see the value of investing in good marketing, you want to make sure your new business hits the ground running. Great marketing can help potential customers hear about you and what you’re offering. After all, you won’t get any business if nobody knows about you.

At its most basic, this should involve a good website and social media presence. Using a website builder like GoDaddy, you would need to pay around £100 for a basic website. But if you’re an online retailer, of course, you want to spend more to make sure it’s as best it can be. This may mean hiring an agency or freelance web developer.

Other marketing activities like direct marketing (such as email), performance marketing (such as search engine optimisation), or paid digital marketing (running ads) each come with different price points. If you don’t know much about marketing, consider a freelancer in the early days to help get your brand setup—it will pay off in the long run.

Marketing for new businesses can be around 7-8% of revenues, but startups with margins less than 10% might spend a higher proportion of the budget on marketing. This depending on the business’s needs.

Professional services

When starting a new business, professional services can be key to ensure you start off right. This could include legal advice, accounting services, or information from your bank.

Lloyds Bank found 76% of new entrepreneurs sought business advice before launching their new business. But, they typically turned to informal sources, such as friends and relatives (41%), or former colleagues (30%). Only 19% sought formal advice from an accountant or bank (11%).

An accountant, for example, can provide lots of value early on. From ensuring compliance to changing rules and regulations to optimising tax efficiency, they can be very valuable. Accounting for a small business can cost between £60 to £250, depending on the complexity of your new business.


Starting a business is hard, time-consuming work. Because of that, you may not have the time or energy to manually trawl through CVs looking for the right candidate. That’s where recruitment agencies can come in useful. Recruiters can take the hassle away from recruiting for the positions you need filling. But these can cost if you decide to go down this route. Regardless of whether you do use recruiters or not, you need to consider the time for interviewing and training, as well as a new employee’s salary into your budget.

How much does business liability insurance cost?

Business insurance is a must for new businesses. Although you might think it’s a big expense, you will want to be protected should things go wrong. Since you won’t have lots of spare cash in your early days, not having insurance could spell disaster.

Public and product liability insurance are popular policies for small businesses. They protect you against injury or damage to a third party arising out of your work. For instance, a customer visits your shop and trips over some stock, injuring themself. Legal cases and lawsuits can be expensive, and insurance can protect you financially.

For some industries, having certain types of insurance is essential. For example, financial advisers, accountants, architects and engineers are required to have professional indemnity insurance.

If you have already, or you’re planning to take on employees, then you’re legally required to take out employers' liability insurance. This will apply even if you only take on temporary or casual workers. Without it, there are serious fines of up to £2,500 per day.

The average cost of public liability insurance for businesses in the UK is £118 a year, but it can range from £50 up to £500 depending on the type of business you are. You may want to spend more or less depending on how comprehensive you want the cover to be.

How much does starting a new business cost?

The average cost of starting your own business is around £12,601, according to Lloyds Bank. This includes covering most of the costs above, like paying for business space, which takes up around 25% of a new business’ cost, or £2,987.

Other big costs include technology (£2,426) and vehicles (£2,440), and together with property account for 60% of a new business’s start-up costs. This likely doesn’t cover things like staffing, or ongoing costs throughout your first year or two though.

However, other sources have found the average start-up cost to be higher, at £22,756 in the first year. But, this figure includes large legal fees (£6,259), accountancy (£3,937) and HR (£3,518) expenses which won’t apply to everyone.

What’s the biggest factor determining how much you pay as a start-up? Location. The most expensive place, unsurprisingly, to set up a new business is in London at £30,211. Meanwhile, entrepreneurs in Wales can expect to pay as little as £8,096 in contrast.

Of course, though, these are estimates and will be very different based on your particular circumstances. Your location, business premises, business type and industry will all change the costs you pay, as well as different levels of business insurance to protect you should things go wrong.

Regardless of which estimate you take, it’s important to understand that it’s expensive. Not only is it often more expensive than you expect in reality, but you’re probably having to dip into personal savings to cover the initial start-up costs.

With only 42.5% of businesses still running after 5 years—likely decreasing due to coronavirus lockdowns—you should try to minimise costs as much as possible to set yourself the best chance of long-term financial success.


The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.