How do I start an online business?

Starting an online business in England and Wales is straightforward, but selling to the public over the internet brings specific legal obligations that high-street businesses do not always face, around consumer rights, data and distance selling. Here is a plain-English guide to the legal steps.

Step 1: Choose your structure

Decide how to trade:

• Sole trader, simplest; register for Self Assessment with HMRC. You and the business are the same legal person.
• Limited company, separate legal personality and limited liability; register at Companies House and with HMRC for Corporation Tax. More admin and disclosure.

Step 2: Register with HMRC (and Companies House)

• HMRC, register for the right taxes (Self Assessment for sole traders; Corporation Tax for companies; VAT if over the threshold; PAYE if you employ anyone).
• Companies House, if you incorporate a company.

Step 3: Sort your website and domain

• Register a domain name (UK domains such as .uk/.co.uk are managed via Nominet through registrars).
• Make sure your website displays the legally required business information (for companies, your registered name, number and office; for everyone, contact details and, where relevant, VAT number).

Step 4: Comply with consumer law

Selling to consumers online means following:

• the Consumer Rights Act 2015, goods must be of satisfactory quality, fit for purpose and as described; services with reasonable care and skill; specific rules for digital content; and
• the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, for distance sales you must give prescribed pre-contract information and, for most goods, a 14-day cooling-off period during which consumers can cancel and get a refund.

Make your terms and conditions, returns and refund policy clear.

Step 5: Data protection and marketing

If you collect customer data (which online businesses do), comply with the UK GDPR and Data Protection Act 2018: have a privacy notice, a lawful basis, and good security. For email/text marketing and cookies, follow PECR, consent (or the soft opt-in) for electronic marketing, and a compliant cookie banner.

Step 6: Payments, tax and records

• Set up compliant payment processing.
• Keep proper records for tax, and account for VAT if registered.
• Consider insurance (e.g. product or professional liability).

Step 7: Protect your brand and content

Consider trade mark registration for your name/logo and make sure you own the IP in your website and content (especially anything created by contractors, get it assigned).

Key takeaways

• Choose a structure (sole trader or company) and register with HMRC (and Companies House if incorporating).
• Sort your domain and display required business information on the site.
• Comply with consumer law, the Consumer Rights Act 2015 and the distance-selling rules (including the 14-day cancellation right).
• Comply with UK GDPR/PECR for data and marketing, handle VAT/records, and protect your brand and IP.

Sources

• Companies Act 2006 / HMRC registration; Consumer Rights Act 2015
• Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (distance selling; 14-day cancellation)
• UK GDPR, Data Protection Act 2018 and PECR (data and marketing)

--- This article is general information about the law of England & Wales as at 2026, not legal or tax advice. For advice on your circumstances, consult a qualified solicitor or accountant.