How Much Does it Cost to Start a Business? UK Trade Edition

Rising costs are squeezing nearly half of UK trade businesses, with 47.4% saying cash flow is the biggest issue. If you're thinking about starting out on your own, that's a number worth paying attention to.

Startup costs aren't just about getting your tools, van, and insurance sorted. They're the ongoing, make-or-break costs that decide whether your new business thrives or folds. That's why you need to really understand how much it costs to start a business in the UK.

In this guide, we'll cover the startup costs, fixed costs, and the sneaky indirect hits that trip up small businesses. Plus, we'll show you how to build a cost plan that keeps you ahead from day one.

What It Really Costs to Get a Trade Business Off the Ground

When you start a business in the UK, you're looking at one-off setup expenses plus monthly bills that keep coming.

Here's a quick map of what's ahead:

• Business structure — choosing between sole trader or limited company affects registration costs, how you pay tax, and admin.
• Tools & equipment — usually the largest startup expenses, which include basic kits, specialist machinery, and even admin software
• Vehicle costs — vans or work vehicles, insurance, road tax, fuel, and branding.
• Insurance — public liability insurance and (if you advise) professional indemnity insurance. Add in building and contents insurance if you take office/storage space.
• Office or storage space —this can include home setups or units. Central areas (e.g., London's West End) have a higher cost per square foot.
• Setup costs — business website and domain, email/phone, office supplies, and business credit card setup.
• Hidden/indirect costs — unpaid admin time, tool downtime, marketing, and transaction fees.

We'll dig into each of these with real numbers and trade examples below.

Sole Trader vs Limited Company: What's Cheaper?

The way your company is structured impacts business costs. It determines how you register, pay tax, and handle admin.

Here's what each route costs:

Starting as a Sole Trader

This is the cheapest way to start a business in the UK. You can begin trading immediately with no upfront registration costs or Companies House paperwork.

No registration with Companies House means you save the initial £12-£40 fee. You just notify HMRC through Self Assessment when you start trading.

Owe Less with More Risk

Simple tax via Self Assessment means you pay tax on profits directly. Your business expenses offset income, reducing what you owe. Light admin makes this ideal for service-based businesses, testing the market without heavy investment.

The trade-off? Personal liability for debts. Your home and personal assets aren't protected if things go south.

Forming a Limited Company

You'll pay about £12–£40 in registration costs with Companies House, depending on how you file. Online applications cost £12, postal applications £40. Company formation specialist services charge £100-£300 but handle all paperwork, including share certificates.

A separate legal entity protects personal assets from business debts. Your house stays yours even if the company folds.

Costs More with Less Risks

More admin includes annual confirmation statements (£13), filing accounts, and corporation tax returns. This takes time or costs accountant fees. Budget £300-£1,000 annually for professional fees if you outsource compliance.

Potentially more tax-efficient as profits grow. You can take a small salary plus dividends, usually saving on National Insurance. This structure also looks more professional when hiring full-time employees or pitching larger contracts.

Non-negotiable Startup Costs You'll Need to Cover

These startup business costs can't be delayed or avoided. Plan for them before opening your own business:

Tools and Equipment

Tools are one of your major expenses, varying wildly by trade. For example, a window cleaner might start with £200 of kit. On the other hand, heating engineers need £10,000+ of specialist testing gear and materials stock.

Initial costs depend on whether you buy or hire. You can hire contractors for a few hundred pounds rather than buying all the equipment day one. Just start with essentials, add specialist kit as jobs demand it.

Quality matters more than quantity. One reliable drill beats three cheap ones that break mid-job. Budget for durability, especially on daily-use items.

Pro tip: Get refurbished or used to save money. Loads of suppliers offer trade accounts with flexible payment terms. You can spread equipment costs over months rather than requiring startup capital upfront.

Vehicle Costs

Buy or lease a van depending on how much cash you have available. Used vans run £3,000-£15,000, new ones £20,000-£35,000.

Don't forget to include:

• Insurance (£800-£1,500 annually based on postcode and driving history)
• Road tax (£290-£600 depending on emissions)
• Fuel (£200-£500 monthly for busy schedules)
• Tyres and maintenance (budget £800-£1,500 yearly)

Signwriting or branding adds £200-£800 but works as mobile advertising. Professional lettering boosts trust and local awareness. It's worth the spend if you work locally.

Pro tip: Leasing spreads the hit, but check mileage limits against your expected travel radius.

Insurance You Can't Skip

Public liability insurance is your baseline, which can run about £200-£600 annually for £1-2 million cover. This protects against claims from customers or the public. Most clients won't hire you without it.

Professional indemnity insurance covers errors in advice or design. Gas engineers, electricians doing specs, or anyone providing technical recommendations need this. Add £300-£800 annually, depending on your trade risk profile.

Tool coverage protects against theft or damage. Vehicle policies usually exclude tools, so separate cover costs £150-£400 yearly. Building and contents insurance applies if you rent a workshop or storage (add £200-£600 annually).

Pro tip: Get quotes before you commit to premises or gear. Premiums vary massively by postcode and trade type.

Office or Storage Space

A home office space keeps costs down initially, but tools and paperwork need secure storage. Calculate space costs against job volume. Empty units drain business finances fast. Depending on the size and location, monthly costs can vary widely.

• Small industrial units (outside cities): £100–£300 per month for a modest unit
• Central locations: £40–£80 per sq ft annually (e.g., a 500 sq ft unit is £1,700–£3,300 per month).

Pro tip: Shared workshops can be affordable alternatives with communal equipment. Maker spaces and trade hubs cost £50-£200 monthly with flexible terms.

Setup Costs

Some of the upfront money you need to account for is the simple business startups that don't seem big but can add up fast.

Website

Your own website acts as a 24/7 online store. Budget for:

• £10–£15 annually for domain registration
• £5–£15 monthly for hosting
• £10–£30 monthly for DIY builders like Wix or Squarespace
• £500–£3,000 one-time for professional design, depending on features

Phone Bills

Business phone and email need reliability. Mobile solutions cost £20-£50 monthly, landlines with features run £30-£80 monthly. Don't skip this. Customers judge professionalism by communication quality, and not everyone likes email or chatbots.

Office Supplies

Accounting software handles invoicing, expenses, and tax prep. Cloud solutions cost £10-£50 monthly and sync with bank feeds. This saves hours of manual bookkeeping and prevents HMRC penalties.

Office supplies and basic IT add another £200-£500 upfront. Laptop, printer, filing systems, and stationery might seem minor, but they add up fast.

Marketing Budget

Branding and logos cost £100-£500 for professional design. Plus, you need to make sure you spend time getting your name out there. If you don't hire someone, this eats into your time. Same with your Google Business Profile. It's free but needs setup time. Claim and optimise it early.

Fixed Costs vs Variable Costs

Fixed costs stay constant monthly. Typical costs for fixed expenses run £300-£1,200 monthly for most trades.

These include:

• Insurance premiums
• Software subscriptions
• Storage rent
• Loan repayments.

These determine your break-even point, or the minimum you need to earn before making a profit.

Variable costs change with activity. Think of:

• Fuel
• Raw materials
• Inventory costs
• Shipping costs
• Card transaction fees (1.5-3% typically)

These increase with more jobs.

Budget for both when planning business finances. Variable expenses depend entirely on job volume and type.

Sneaky Costs That Drain Your Time and Wallet

The expenses that catch new business owners off guard usually come from inefficient systems rather than obvious bills.

Indirect Costs

Admin time is a hidden monster. Handwriting quotes. Chasing late invoices. Losing job notes. Repeating phone calls. It all costs you hours that could’ve earned £30–£60 a pop.

Most new business owners don’t realise they’ll spend 10–15 hours a week just keeping on top of admin. That’s £300–£900 gone, not from buying tools, but from not using your time right.

Poor comms are even worse. Missed site specs or unclear job details mean rework, wasted materials, and crews standing around. One misstep and the profit from a job vanishes.

Tool downtime? It’s a productivity killer. Breakdowns mean delays, emergency hires, and awkward calls to customers. Expect to spend £200–£500 a year just staying operational.

Last-minute supply runs are another silent killer. Forget a part and you’re doing double miles, burning fuel, and paying premium prices—all avoidable with better prep. These are daily drains that chip away at your margins.

Marketing Costs

You’ve got to get seen to get booked and get the right crew. And 36.8% of tradespeople list recruitment as a major issue, and finding new customers is a big challenge. So making is an absolute must.

Here’s what you’ll likely spend:

• Local SEO (Search Engine Optimisation) - Takes 3–6 months to build but delivers steady leads once it’s working. Great long-term ROI.
• Paid Ads (Google/Facebook) - Instant visibility for urgent jobs. Expect to spend £100–£300/month minimum to see results.
• Print Materials (cards, flyers, signage) - Cost-effective for local jobs and word-of-mouth referrals. One-off cost of £50–£300 depending on quality.
• Online Directories (e.g. Checkatrade, MyBuilder) - £50–£150/month for verified leads. Worth it if you track conversions and stay active.
• Social Media Content - Takes time if you DIY. If outsourced, budget £100–£500/month for basic packages.
• Website SEO updates & blog content - Either time-heavy or outsourceable. Helps drive traffic long term. Budget varies from £0 (DIY) to £500+/month (agency).

Pro tip: Budget 5–10% of your monthly revenue goal for marketing. It keeps the leads coming and your diary full.

Ongoing Operating Expenses

Getting set up is just the start. Once your business is off the ground, the regular costs kick in, and they don’t stop just because things go quiet.

You’ll be dealing with monthly outgoings like software, tools, fuel, marketing, mobile plans, and insurance. Some are fixed, others shift depending on how busy you are. Either way, they need managing if you want to keep your cash flow steady.

These costs aren’t always huge on their own, but together, they add up fast. Miss a payment here, forget a renewal there, and suddenly you’re on the back foot. That’s why it pays to track them early and build them into your pricing from the off.

You’ve also got the admin that goes with it, like keeping records, chasing receipts, and dealing with renewals. It’s not glamorous, but it’s what keeps things ticking.

Bottom line? It’s not enough to just earn more than you spend. You need to know what’s going out, when, and why. That’s how you stay in control and stop monthly bills from running the show.

Example of a Trades Startup Budget

Here's what small business owners typically spend when starting out:

These estimated costs vary based on trade type, location, and scale. A mobile service might launch for £2,000-£5,000 total, while a workshop operation could need £20,000-£50,000 in startup capital.

What to Do Before Spending a Penny

Smart planning prevents expensive mistakes and reduces start-up costs through better decisions.

Do Your Market Research

Understanding customer demand is the first step to avoiding wasted spend. Before you buy tools or set up an office space, research your local market. Look at what similar small businesses charge, where they work, and what services they offer.

Talk to potential customers. Ask what problems they have with current providers, what they need more of, and what they'd pay for better service. This shapes your business idea with real demand, not guesses.

Don’t forget compliance. Some trades need specific licences or qualifications that affect your business structure and startup costs. Missing those can lead to delays and extra fees you didn’t plan for.

Build a Business Plan and Financial Plan

Before you start a business and put money up front, get clear on your business model. Are you focusing on emergency callouts, regular maintenance, or big installations? Each one comes with different startup expenses and marketing costs.

Create a startup budget that includes your equipment costs, operating expenses, and indirect costs like admin time. Add a 20% buffer for unexpected costs—there’s always something.

Map out your financial plan month by month. Include fixed costs like insurance and software, and variable costs like raw materials and fuel. This shows how many jobs you’ll need to break even and helps avoid cash flow gaps early on.

Business loans or personal savings?

Most small businesses start with £5,000–£15,000 from savings or family. Loans need a solid financial plan and often come with personal guarantees. Start lean where you can.

Choose the Right Tools Early

Startup costs include more than tools and kits. You’ll also need systems in place from the start. Wasted time on admin, quoting, or lost paperwork adds up fast. These are indirect costs that quietly drain your business finances.

Job management software for tradesmen helps automate quoting, scheduling, time tracking, and invoicing. The right system keeps your crew moving, cuts down operating expenses, and reduces the admin load from day one.

Pick digital tools that handle multiple tasks and work on-site—on mobile, not just in the office. You’ll spend less time rewriting notes or chasing payments, and more time earning.

Start with what solves your biggest bottlenecks. In most new businesses, that’s quoting, job tracking, and cash flow. The right tools early on mean fewer startup expenses later and a tighter grip on your business costs.

When to Hire Help (And What It'll Cost)

Professional services can save money by preventing expensive mistakes and freeing your time for billable work. Here’s what small business owners usually spend when bringing in the pros.

Accountants and Bookkeepers

Getting taxes wrong can cost more than hiring someone to do it right. Many small businesses use a mix of software and accountant support to stay compliant and save time.

• Professional fees - £25–£100/hour or £300–£1,500/year for full-service packages
• Payroll services - £2–£10/month per employee for PAYE, pensions, and reporting
• Accounting software - £10–£50/month for cloud-based tools that handle invoicing and expenses

Good accountants help you stay on top of business finances, file returns on time, and advise on the best business structure as you grow.

Legal Advice

Setting up your business properly helps avoid disputes and expensive mistakes. This includes contracts, insurance, and anything to do with hiring full-time employees or bringing on subcontractors.

• Basic legal advice: £200–£500/hour
• Templates or one-off reviews: A lot cheaper than dealing with claims later
• Employment law support: Covers IR35, pay, pensions, holiday, and dismissal procedures

Health and safety law also varies by trade. You might need risk assessments, method statements, or specific insurance levels.

56.9% of UK trade businesses say they’re facing a skills shortage. And it’s 100% for those with two or more staff. Hiring help is part of growth, but it brings extra responsibilities.

Legal advice keeps you protected as your crew grows.

Marketing or Website Agencies

If you’ve got more work than time, outsource your marketing. It helps grow customer demand and fill your calendar without draining your evenings.

• Local SEO services: £300–£800/month for rankings and traffic
• Full digital marketing: £1,000–£5,000+/month depending on size and strategy
• Website builds: £1,000–£10,000+, depending on features like online store or booking system

Marketing costs vary widely but can pay off fast if they bring in steady leads. Just make sure you know your customer lifetime value before you spend money.

Smarter Tools, Smaller Headaches

Cut indirect costs and operating expenses by automating repetitive tasks. Look for systems that:

Link quotes → jobs → time → invoices automatically

Digital workflows mean less double-handling. When a quote turns into a scheduled job, and that job feeds directly into timesheets and invoices, you’re cutting hours of admin every week. That’s less chasing, more earning.

Offer mobile apps for on-site updates

With field apps, your crew can log progress, upload photos, and tick off tasks in real time. No more scribbled notes or lost specs. Everyone’s on the same page, even when they’re not on the same site.

Reduce double-entry and missed communications

Integrated systems keep all the job details, specs, and payment terms in one place. No more misquotes or forgotten extras. You get fewer mistakes, happier customers, and more time to focus on the work that pays.

Use job management software to keep your diary tight and cash flow steady. Connect quotes, schedules, timesheets, and invoices. That means fewer delays, fewer missed payments, and more time on the tools. The right setup pays for itself in hours saved and jobs done right the first time.

Get Set Up Right From the Off

Starting a trade business comes with all sorts of costs, like tools, vans, insurance, setup, and the admin no one talks about. Miss something early, and it can slow you down fast. That’s what trips up most new business owners. Not the work itself, but the admin, the delays, and ongoing costs that are as simple as a utility bill.

Intrflex makes it easier to manage business startup costs. It handles your jobs, quotes, time logs, and invoices in one system, so you stay organised, stay paid, and don't waste hours chasing your tail.

Book a free demo today.