How to Start an Online Business in the UK [2025 Guide]

7 July, 2025 · 10 min read

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Discover how to start an online business in the UK with legal setup tips, marketing strategies, tools, and ideas to turn your skills into income.

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Understanding the market
What kind of online business can you start in the UK right now?
Legal requirements and company setup
Costs and finances
Customer acquisition strategy
Tools, systems and automation
Ready to launch? Register your online business with ANNA today

Starting an online business in the UK today can be exciting and practical. By 2025, the UK is still a powerhouse in e-commerce – Statista projects about 62.1 million UK e-commerce users by 2025.

In fact, the UK will be the third-largest e-commerce market globally, behind only China and the US.

New government initiatives – like the digital Business Growth Service launched in early 2025

– are making it even easier for tech-savvy entrepreneurs to access online support. And with 94% of UK businesses still actively trading in mid-2025, there’s plenty of evidence that new ventures can thrive.

Ready to make it official? You can register your business with ANNA in minutes – our free registration widget handles Companies House paperwork for you (even on the same day)!

Understanding the market

Before you dive into launching your online business, it pays to understand what UK consumers are buying, how they shop, and what they truly care about in 2025.

Online shopping habits have evolved

Clothing and footwear continue to dominate online sales, with over 40% of UK shoppers purchasing these items online.

But it's not just what people buy – it’s how they expect to receive it. Over 50% of UK consumers now expect same- or next-day delivery, meaning convenience and speed are no longer perks – they’re deal-breakers.

Gen Z and Millennials are shaping how products are found. According to the same report:

53% of Gen Z in the UK use Instagram to discover products, and 41% use TikTok.
Millennials lean on Instagram (52%) and Facebook (49%) for finding brands.

If your target audience is under 40, your marketing needs to meet them where they scroll: visually rich platforms like Instagram Reels and TikTok are must-haves.

Additionally, UK consumers are increasingly putting their money where their values are. There’s a rising demand for:

Eco-friendly products
Digital health and wellness tools
Online education around wellbeing and personal development

In fact, the UK’s sustainable goods market is now worth over £40 billion and growing nearly 28% year-on-year.

What kind of online business can you start in the UK right now?

There’s no shortage of online business ideas, but the best one for you will depend on your skills, budget, and interests. That said, some business models are especially popular and practical in the UK right now and they don’t all require coding or massive startup capital.

Here’s a breakdown of online business types you can start today:

1. Start your ecommerce store and sell physical products online

You don’t need a business background to launch an online store. Start your own e-commerce store by sourcing, making, or reselling products.

➸ Examples:

Handmade goods (jewellery, candles, art) via Etsy or Shopify
Private label skincare or eco-friendly cleaning products
Dropshipping tech gadgets or accessories via Shopify and DSers
Niche fashion (e.g. maternity wear, streetwear for teens)

Why it works: UK customers are used to buying online. If you solve a specific need, offer quick delivery, or tap into trends (like sustainable materials), you can build a loyal audience.

2. Offer services online

Use your skills to provide services directly to clients, either freelance or through a branded business.

➸ Examples:

Virtual assistant or social media management
Copywriting, editing, or content writing
Online tutoring (maths, science, languages)
Website development or graphic design

Why it works: No inventory or shipping to worry about, and you can start with just a laptop and internet connection. UK clients are actively hiring freelancers, especially for digital services.

3. Digital products and courses

Once created, digital products can be sold over and over again with no physical logistics.

➸ Examples:

Printable planners or templates (sold via Etsy or your own site)
Online courses (on platforms like Teachable or Thinkific)
Photography presets, Notion templates, or fitness programs
E-books on niche topics (e.g. “How to Homeschool in the UK”)

Why it works: Low overhead, no shipping costs, and huge profit margins. If you have niche knowledge, package it and help others solve a problem.

4. Affiliate marketing and niche blogging

Create a website that earns money by recommending other people’s products.

➸ Examples:

A comparison blog about UK travel gear with Amazon affiliate links
A niche site reviewing eco-friendly baby items sold on Not On The High Street
A YouTube channel on DIY home improvements with affiliate links in the description

Why it works: Great for passive income, especially if you can rank well in Google or build a loyal following. It takes time, but success means money while you sleep.

5. Subscription boxes and memberships

If you can curate a great experience, customers will keep paying you monthly.

➸ Examples:

UK-based wellness boxes (e.g. herbal teas, bath products)
Pet treat boxes with a British focus
Digital memberships (like exclusive content or tools for entrepreneurs)

Why it works: Predictable revenue and strong customer retention. The subscription model works well for UK consumers who value convenience and surprises.

6. Print-on-Demand

You upload your designs, and when someone orders, the product is printed and shipped automatically.

➸ Examples:

Custom UK-themed mugs, t-shirts, tote bags
Personalised gifts (wedding, new baby, birthdays)
Motivational or funny slogan designs

Why it works: You don’t handle stock or fulfilment. Services like Printful or Gelato connect with your Shopify or Etsy store. A great option if you’re creative but don’t want to hold inventory.

🔎 Tip: If you’re just getting started, combine your interests and skills with what’s already selling well in the UK.

For example, if you love cooking and design, you might sell printable meal planners or start a recipe blog with affiliate links.

Let your lifestyle and strengths guide your business model: there’s room in the UK online space for niche, personal, and creative ideas.

Legal requirements and company setup

Once you're confident in your business idea, it's time to take care of the legal setup. In the UK, most small businesses choose one of the following structures:

✅ Sole Trader: This is the simplest option.

You just register as self-employed with HMRC (online) and pay income tax through a yearly self-assessment.
You’re personally responsible for any business debts.
Ideal for freelancers, consultants, and solo service providers.

✅ Limited Company (Ltd): A more formal structure where your business is a separate legal entity.

You register with Companies House (usually a £50 fee online).
You must appoint at least one director and provide a UK address.
A business bank account is mandatory.

Many e-commerce owners choose Ltd status for limited liability and tax benefits.

ANNA can handle the entire company formation process for free — file before 3pm, and you could be incorporated the same day.

With ANNA you can do it for free and open a business account that integrates with Shopify, Woo-commerce, Etsy, eBay and Amazon.

Get started

✅ Partnership / LLP

If you're starting with one or more partners:

A Partnership is like being a sole trader, but you share profits and responsibilities.
A Limited Liability Partnership (LLP) offers some liability protection, combining elements of partnerships and companies.

Step-by-step: Registering your business

1. Choose a name

Make sure it’s unique and available on Companies House or through ANNA’s free company name checker.
Check domain name availability too if you're going online.

2. Register the business

Sole traders: Register with HMRC for self-assessment.
Limited companies: File online at Companies House.

ANNA’s free registration tool can take care of this for you.

3. Set a registered address

All Ltd companies need a UK postal address (not just a P.O. Box).

Don’t want to use your home address? ANNA offers a virtual UK office address
4. Prepare legal documents

For Ltd companies:

You’ll need a Memorandum and Articles of Association.
You’ll also complete Form IN01 with the director and share information.

ANNA provides templates, so you don’t need to create legal documents from scratch.
5. Licenses & compliance

Most online businesses don’t need a specific license, but always check your niche:

Selling food? You’ll need hygiene registration with your local council.
Giving financial advice? You may need FCA authorisation.
Collecting customer data? Ensure you’re GDPR-compliant (privacy policy, cookie notice, etc.).

Costs and finances

Startup costs

These vary by business type. Here are common expenses to budget for:

Company registration: ~£50 at Companies House (ANNA does it for free)
Website: Domain name (£10/yr), hosting (£60–£120/yr for a basic site), and possibly a website builder or Shopify plan (£25–£40/month for Shopify Basic). Use free themes or low-cost templates to save money initially.
Branding & design: A logo and basic branding might cost £0 if you DIY with tools like Canva, or £50–£100 on a freelancer.
Inventory/Equipment: If you sell products, the initial stock purchase could range from a few hundred to several thousand pounds, depending on scale. For digital services, you might just need a decent laptop (~£500–£1,000) and software subscriptions.
Legal & setup: If you need an accountant or legal advice, budget for fees. Also consider insurance (public/product liability insurance might be £5–£20/month for a microbusiness, depending on risk).

Ongoing costs

Hosting and tools: Renew your web hosting and any software subscriptions (email marketing tools, Canva Pro, Shopify apps, etc.).
Marketing: Think of a monthly ad budget. For example, allocating £50–£100 per month for Facebook/Google ads can help grow sales early on.
Bank account: Business accounts may have fees or a small monthly charge (ANNA’s basic account is free, with paid upgrades for premium features).
Utilities and office (if any): If you’re renting an office or storage, include that. But many online startups run from home, cutting this cost.

Customer acquisition strategy

Getting your first customers is all about visibility and value. An online shop has many marketing channels; the key is to target the right audience with relevant content. Here’s a breakdown:

1. Content and SEO

Write useful blog posts or guides related to your niche. For instance, if you sell gardening tools, write a “Top 10 Veggies to Grow in a UK Summer” post.
Use basic SEO: include UK place names or local gardening tips. This helps Google rank you higher. Free tools like Google’s Keyword Planner can reveal what Brits are searching for (e.g. “organic herb garden UK”). Quality content can drive organic traffic over time.

2. Social media presence

Pick platforms where your customers hang out. If you’re targeting younger shoppers, Instagram and TikTok are goldmines (remember: 53% of Gen Z in the UK shop via Instagram).
Post engaging content like product demos, behind-the-scenes, or user testimonials. Use UK-specific hashtags (e.g. #UKSmallBusiness, #LondonEats) to reach local audiences. Even for B2B services, LinkedIn can work.

3. Paid advertising

Run small ad campaigns to test the waters. Facebook/Instagram ads let you target Brits by age, location, and interests.
Google Ads (including Google Shopping) is great if you sell products – set a daily budget (start around £5–£10) and refine your keywords based on performance. Keep ad copy friendly and benefit-focused (e.g. “Handmade London Gifts – Free UK Shipping!”).

4. Email marketing

Build an email list right away. Offer a small discount or free ebook in exchange for sign-ups (e.g. “Subscribe to get 10% off your first order”).
Send weekly or bi-weekly newsletters highlighting new products or useful tips. This turns casual visitors into repeat customers. Services like Mailchimp or Sendinblue have free tiers for beginners.

5. Marketplaces & partnerships

Leverage existing platforms. Consider listing on Etsy, Amazon UK or Not On The High Street if your products fit. They already have UK traffic.
Also partner with other UK businesses for cross-promotion – for example, a custom tea seller could team up with a British pottery shop and share each other’s posts or bundles.

6. Influencers & referrals

Even nano-influencers with a few thousand followers can boost a niche product. Offer them a free sample for an honest review.
Encourage customers to refer friends by giving both a little discount on next orders.

Tools, systems and automation

Technology is your friend — there are plenty of tools available to make running your online business easier and more efficient. Here are the must-have tools and software for a UK-based online business:

1. E-commerce platform

Shopify and BigCommerce are popular, beginner-friendly platforms with UK support and local payment options.

WooCommerce (a WordPress plugin) is free but requires more technical setup.
Compare pricing: Shopify Basic starts at around £25/month, while WooCommerce only requires hosting.

2. Payments

Use Stripe or PayPal to accept card payments online — both are supported in the UK.

Stripe fees: ~1.4% + 20p per UK card transaction.
ANNA’s business account provides a free UK sort code and account number, making it easy to accept BACS payments.

3. Accounting software

Tools like Xero, QuickBooks, and FreeAgent (UK-focused) help manage bookkeeping, invoicing, and taxes.

ANNA Money also automates this process — it imports transactions, calculates tax liability, and matches receipts to expenses (just snap a photo in the app).

4. Email Marketing and CRM

Mailchimp, ConvertKit, or Sendinblue let you automate newsletters, product updates, and email campaigns.
For managing customer relationships, HubSpot CRM offers a solid free plan to track leads and interactions.

5. Social media scheduling

Use tools like Buffer or Later to schedule posts on Instagram or Facebook in advance.
Plan your content for the week and avoid having to post manually each day.

6. Project management

Free tools like Trello or Asana help you organise tasks, deadlines, and workflows.

7. Productivity

Calendly (free) or Google Calendar for appointment scheduling.
Google Drive for cloud-based file storage and document sharing.
Use Notion or Evernote to keep track of notes, content ideas, and business plans.

8. Graphic design

Canva (free and paid plans) makes it easy to design logos, social media graphics, banners, and more — no design experience needed.

9. Automation

Zapier or Make.com connect your apps and automate workflows.
For example, automatically add new Shopify customers to your Mailchimp list, or trigger a Twitter post when you publish a blog.

Start with simple “zaps” and build more complex automations over time.

By setting up these systems early, you’ll save time on repetitive admin. For example, ANNA’s tools don’t just register your company — they automate your bookkeeping, file VAT returns, and calculate corporation tax for you. No more spending your weekends sorting receipts or doing manual accounting.

Ready to launch? Register your online business with ANNA today

Starting is as simple as clicking the button below and filling a short form. With ANNA, you can register your UK company for free and open a business bank account simultaneously. Thousands of UK entrepreneurs trust ANNA to kickstart their businesses. Why not join them?

The simple, hassle free way to register a company

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