How much does it cost to start a business in the UK in 2025?

Starting a business requires motivation, determination and unwavering focus. In many cases, it also takes money. The price tag involved varies depending on factors such as industry, location and business model, but careful planning can keep costs under control.

From maintaining appropriate inventory levels to selecting relevant insurance policies, startup business costs needn’t spiral out of control and certainly shouldn’t put you off following your dreams. In this guide, we get to the heart of how much it costs to start a business and teach you how to estimate the cost for your venture. 

How to estimate the cost of getting started

Research by Hewlett-Packard found that starting a business in the UK costs £22,756 on average. This figure includes incorporation costs, accountants' fees, legal expenses, HR overheads and general administration. 

While a general headline figure such as this can be a helpful starting point, the actual costs depend on the type of business you’re starting and the industry you’re working in. Creative and tech industries typically have lower startup costs compared to food or property sectors, for example, so there’s no reason you can’t start a business for less.

Before calculating your investment, you need to understand the basics of your business. 

Writing a business plan is a crucial early step, and a strong plan should include cost estimates. To calculate your costs effectively, you need to understand how your business operates. Consider logistics, stock levels, staffing and overheads so you know what costs you need to cover.

It's better to overestimate costs than underestimate them. Planning for worst-case scenarios can help you manage risks like tight cash flow or inflation. If you're unsure how to approach this, seek advice from experienced business owners or a financial adviser. They can help ensure your business plan includes enough detail for accurate cost estimates.

The cost of business essentials

Once you understand what your business needs to operate, you can estimate the cost of individual essentials. Here are some of the costs you might encounter. 

Registration 

If you plan to earn more than £1,000 from your business, you must notify the relevant authorities to remain legally compliant. Sole traders – whether self-employed or running a side hustle – and partnerships must inform HMRC so they can pay tax through self-assessment. The good news is this can be done free of change. 

If you run a limited company, you must register your business and the business name with Companies House. Online registration costs £50, but fees vary – paper applications cost more than online applications, for instance. You might also choose to hire a company formation specialist, which can add to the cost, with prices ranging from £50 to £150, depending on the services included. Upon registration, you receive a certificate of incorporation as proof your business is officially registered. 

Estimated cost - £0-£200 

Equipment

Make a list of all the equipment you need to run your business. This might include:

• Machinery 

• Tools

• Vehicles

• Office supplies and furniture

• Card payment solutions

• Software 

The cost of this can vary greatly depending on your business type. A plumber who needs a van and tools will likely spend more on equipment than a singing teacher offering one-to-one classes over Zoom.

Estimated cost - £200-£5,000

Inventory and stock

Inventory includes the raw materials you need to operate or create your products. This could be food ingredients, cotton, timber or some other base products. Stock refers to the goods you sell. Starting with a modest amount of both can reduce costs. A business plan is crucial here because it helps you predict which items may sell in high quantities, ensuring you order enough to avoid running out. 

Estimated cost - £500-£10,000

Workspace and utilities 

Consider where you need to work. Not all businesses require the same workspace, but common places include: 

Your home – This is the cheapest option. Running a business from home usually doesn't cost your business directly, but home energy bills might rise if you use more power during the day

An office – Offices in high-demand areas like city centres cost more than those in rural locations. Prices also differ dramatically across the UK. According to workspace brand Orega, office space in London can cost up to £120 per square foot, while in Liverpool, it’s more like £59 per square foot. 

A warehouse – Certain businesses, such as manufacturers and online retailers, require a warehouse. Prices vary based on size and location. Data from real estate and investment management firm Colliers shows warehouse space can cost between £11 and £14.50 per square foot

A retail space – High street retail spaces vary widely across the UK. London, Oxford and York are the most expensive, while Blackpool, Rotherham and Stoke-on-Trent offer more affordable options, according to corporate recovery specialists Real Business Rescue.

And don’t forget utilities. Whether you’re working from home or in a warehouse, you must pay your gas, electricity, internet and water bills. 

Estimated rental cost - £0-£10,000+ per month 

Estimated utilities cost - £100-£500+ per month

Insurance 

The only type of business insurance you need legally is employers’ liability insurance, and that’s only if you employ people who aren’t close family. However, even if other insurance types aren't mandatory, the cost of paying for a claim yourself can be significant if you're uninsured. Identify the risks your business faces, such as theft, accidents or legal liabilities, and shop around for suitable insurance policies. Examples include professional indemnity insurance and public liability insurance.

Estimated cost - £0-£150 per month 

Operations and licenses

Calculate the daily costs of running your business, including travel, fuel, shipping or manufacturing. Again, the cost here differs by industry, scale and materials. 

Some businesses, such as those involving food preparation, the serving of alcoho,l or transportation, may require a business licence. These costs are generally low but should still be factored into your startup budget.

Estimated cost - £0-£10,000+ per month 

Accounting

You can manage your accounts in several ways. Using Excel or a logbook is the cheapest option but requires manual work. An accountant may take away the burden but they charge according to your business's complexity. Alternatively, you could use accounting software, which may come bundled with your business bank account, helping you save money.  

Estimated cost - £0-£500 per month 

Marketing

You can often control the cost of marketing, adjusting it gradually as you expand. In the early days, it’s wise to limit your marketing spend, but don’t skip it entirely. After all, no one can find your business if you don’t advertise it. Consider the following marketing options and review the estimated costs:

Build and host a website – You can build a website cheaply if you're tech-savvy and willing to do it yourself. Otherwise, you may need to pay a web designer. Domain names and hosting costs are usually affordable, especially with platforms like Squarespace.

Estimated build cost - £0-£1,000 then £10-£30 per month for hosting the site

Pay-per-click (PPC) advertising – You can pay search engines to promote your website or content and pay a small amount for each click the ad generates. You can tailor this to your needs and costs vary by both platform and competition. 

Estimated cost - £100-£5,000 

Social media – Advertising on social media can help you reach millions of people. If you enjoy posting engaging content, it might not cost you much at all as you build an organic following, but you can pay social media platforms to boost your posts if you prefer.

Estimated cost - £0-£200+ per month 

Print media – You might choose to print posters, flyers or newspaper ads to promote your business. Make sure you check local council rules on posting flyers first to avoid potential fines. 

Estimated cost - £30+ 

Can I start a business with no money?

Like most things in life, money can make starting a business significantly easier. But if cash is tight, don’t let it discourage you. You may just need to be more modest in your ambitions, especially at first. 

Starting a global manufacturing business with no money is unrealistic, but small, service-based businesses or those that operate from home or online can often be started with little to no upfront investment.  Focus on your skills and personality instead of physical goods, as you can offer these qualities for free. If you want to start a business with no money, consider small business ideas like:

• Freelance writing: Offer content, copywriting or blogging services

• Virtual assistant: Provide administrative support remotely to businesses 

• Social media management: Manage social media accounts for small businesses or influencers

• Online tutoring: Teach subjects or skills online.

• Consulting: Use your expertise in a specific area, such as marketing, finance, or life coaching to help others

• Affiliate marketing: Promote products or services and earn a commission for each sale made via your referral

• Transcription services: Convert audio or video files into text for clients

• Pet sitting or dog walking: Offer pet care services for clients in your area

• House cleaning: Start a cleaning service with minimal equipment and supplies

While costs vary, with careful planning and a clear business model, starting a business can be a manageable and rewarding journey. Focus on your strengths and don't let initial costs hold you back.