1. Introduction to Business Set Up Costs
Starting a new business requires careful financial planning. One of the first steps is understanding business set up costs—the initial expenses you must cover before generating revenue. These costs vary depending on the business type, size, and industry but are essential to budgeting and long-term success.
2. What Are Business Set Up Costs?
Business set up costs are the initial expenses involved in establishing a new company. They include both one-time costs (e.g., registering your business) and ongoing costs (e.g., rent, utilities, insurance).
3. Examples of Business Set Up Costs
Legal and Registration Fees
- Company formation with Companies House (around £12–£40 online).
- Business licences and permits.
- Trademarks and intellectual property registration.
Premises and Utilities
- Office or shop rent.
- Security deposits.
- Utility bills (electricity, internet, heating).
Equipment and Technology
- Computers, phones, and software.
- Machinery or specialist tools.
- POS (Point of Sale) systems for retail.
Marketing and Branding
- Logo design and branding materials.
- Website development and hosting.
- Advertising and social media campaigns.
Stock and Inventory
- Raw materials for production.
- Wholesale goods for resale.
- Packaging and storage.
Insurance
- Public liability insurance.
- Employers’ liability insurance (if hiring staff).
- Professional indemnity insurance.
Staff Costs
- Recruitment and training.
- Salaries and benefits.
- Payroll setup.
Professional Services
- Accountant or bookkeeper.
- Business consultant or legal advisor.
4. Average Business Set Up Costs in the UK (2025)
- Home-based business: £500 – £5,000.
- Small retail shop: £10,000 – £50,000.
- Restaurant or café: £20,000 – £100,000.
- Tech startup: £5,000 – £50,000.
5. How to Reduce Business Set Up Costs
- Start from home to avoid rental expenses.
- Use free or low-cost software for accounting and marketing.
- Outsource services instead of hiring full-time staff initially.
- Buy second-hand equipment.
- Apply for grants or small business loans.
6. Why Calculating Set Up Costs Is Important
- Prevents running out of cash before launch.
- Helps set realistic prices and sales targets.
- Attracts investors by showing financial planning.
- Ensures you break even faster.
Frequently Asked Questions
Q1: What’s included in business set up costs?
Everything needed before trading starts—registration, equipment, stock, marketing, and insurance.
Q2: Can I claim set up costs as expenses?
Yes, many startup costs are tax-deductible, including equipment, marketing, and professional services.
Q3: How do I calculate my business set up costs?
List all required expenses, estimate costs, and add a contingency of 10–20%.
Q4: Do I need a large budget to start a business?
Not always—some home-based or online businesses can launch with under £1,000.
Q5: Can I get funding for set up costs?
Yes, through small business loans, government grants, or startup schemes.
Q6: What’s the biggest set up cost for most businesses?
Premises (rent and deposits) and equipment are usually the most expensive.
Conclusion
Understanding business set up costs is essential for every entrepreneur. From legal fees and equipment to marketing and staff, knowing your expenses upfront helps secure funding and avoid surprises. In 2025, careful planning and cost management can make the difference between a struggling startup and a successful business launch.