Posted February 27, 2023

How Much Money Do I Need to Start a Business?

There are successful entrepreneurs that have started their business with £5 in their bank and an idea, but most businesses need some start up cash – the question is how much do you need to start a business and where to get money to start a business?

Starting a business takes a lot of determination, an appetite for risk and usually a bit of money. Like everything, owning a business costs money and when you start up, often there is less coming in than there is going out. The amount of money you need to start a business will depend on the industry, what equipment you need and where you will be based.

We have considered below some common costs that a new business might incur:

Registration Fees

If you are setting up a business and you want it to be a limited company, you will need to pay a fee to form the company. You can do this directly with Companies House or pay an incorporation agency to do it for you. If you decide to be a sole trader or partnership you just need to register with HMRC and there is no charge for this.

  • Estimated cost – £0 – £150.

Equipment Costs             

There is a lot of equipment needed to run a business, if you are using a computer you will need to purchase one with Microsoft business account rather than a personal account. If you are intending to set up an office you will need desks, chairs, cupboards, for a shop you will need a till, shelving, and other furnishings etc. There are some great second hand office furniture stores where you may be able to find what you need.

  • Estimated cost – £500 – £2,500.


Are you intending to work from home, from a flexible workspace, an office, warehouse or a shop?

The amount you will spend on a premises depends on the type of business you are intending to run and it’s location.

Working from home is virtually free but it can be a challenge working from home whilst starting a business. If you are looking to rent a small office space expect to pay between £20-£50 per sq. ft per month depending on size and location.

A retail unit in a prime location could cost significantly more and don’t forget the legal fees, stamp duty and deposit!

  • Estimated cost – up to £6,000 per month for prime retail/bar location.

Staff Costs

If you are going to employ someone you will need to pay them a salary, the national minimum wage for a full-time employee equates to a salary of c£18,000 per annum. You will need to pay employer National Insurance and contribute to their pension on top of this. The national living wage is increasing by 9.6% to £10.42 per hour from 1 April 2023.

You may also want to consider if you will cover other staff benefits such as private medical insurance and a company car.

  • Estimate – £800 – £5,000 per month depending on hours and experience


The best way for your potential customers to hear about your new business is via a website, if you are selling online the cost of a website can be tens of thousands of pounds. Expect to pay up to £1,000 for a basic website with a couple of pages.

  • Estimated cost – £1,000


It is absolutely essential you have insurance; most businesses need public liability insurance and if you have employees it is a legal requirement to have employers liability insurance.

  • Estimated cost – £40 per month

Accountancy and Legal Fees

Whilst many start-up businesses try to save on professional fees it is worth seeking advice early on, we offer a free consultation to new start businesses where we can provide advice on the structure and set up.

You will also need accounting software to keep track of your income and expenses, these average about £25 per month for the main version of the software (most software providers do a basic version for less money).

  • Estimated cost – £50 – £150 per month