Beginner’s Guide on Starting a Software Development Business in the United Kingdom
Starting a software development business in the UK has lots of advantages. For one, it will surely be profitable once you find the right niche and product. Additionally, you can access various support, grant, and tax relief programs from the state and various startup incubators. More importantly, you’d be helping various organizations and individuals in bridging gaps and finding solutions in today’s digital world.
But starting a business isn’t as easy as it seems. There’s a lot of planning, processing, and strategizing to do until you can say that your business is in a solid position. If these are what you’re worried about, fret not for you can get lots of help. Here, we’ll give you a glimpse of what you need to do to successfully launch your software development business and an overview of the industry. So hop aboard the business express as 3E Accounting provides a comprehensive guide to company registration in United Kingdom.
What is a Software Development Business?
As its name suggests, software development is the creation and maintenance of software, applications, frameworks, and other software components. Some critical works of software development companies include web, mobile, backend, API, and app development. The products of these works are the metaphorical gears that allow businesses and other organizations today to work more efficiently and effectively. For example, accounting software, desktop publishing programs, and database software assists businesses in their daily tasks or reporting responsibilities.
Software Development Trends
The year 2020 has brought many changes. That is, in the way people interact and also the way technology allows for greater mobility even with the lockdowns and quarantine protocols. Today, software developers are at their peak at building tools for people to stay more connected. Some of the many digital technology booms in this turn include video-based communication platforms, tracking, and control software, and cloud classrooms. These are all products of software development.
Software development businesses aim to develop solutions that fix operating problems and optimize existing solutions. The software development process starts with analysis and planning. This is where stakeholders and end-users would discuss what it is they want to achieve and how to do that. Once they’ve identified the rationale and outcomes, software developers will now start the design and prototype stage. This stage is then followed by the programming, testing, and deployment. The developers would also be involved in the post-deployment stage with operation and maintenance.
The software development industry has been a key player in the progress of today’s digital age. Additionally, with the increasing reliance on IT, the industry is experiencing surging growth and demand. Starting a software development business in the United Kingdom today would surely be fruitful provided you find the right investors and end-users to benefit from your problem-solving ideas and skillsets. Here’s a guide on how you can successfully start a software development business.
How to Start a Software Development Business in the UK
Identify a Problem and Create a Business Plan
The primary concern of starting a software development business in the United Kingdom centres on what problems you want to solve. You can always hire the talent and team to work for you, but you cannot go about without a concrete idea of what it is your business is for. The software development industry in the UK is starting to grow, which means you have to bring something innovative to the market.
For example, you can leverage the concept of AI in improving the banking experience. Or it can be more specific like reducing the processing time of one particular transaction in loan applications. Next, you need to create a business plan out of your business goal, setting the details and plans on how you will reach this end. In this business plan, brainstorm and identify your product types, target market, marketing strategy, and budget.
Protect Your Intellectual Property
Once you’ve decided on a solid idea and plans for your software development company, you have to obtain patents and trademarks to protect your intellectual property. There have been many past cases of disputes of ownership to innovative ideas, and this action will help you secure that right. Also, make sure that your collaborators sign NDAs to avoid information or idea leakages.
To apply for a patent or trademark, you have to apply in the Intellectual Property Office (IPO). You have to submit several documents and undergo various procedures to ensure that your innovation is unique. The application can take years, depending on the case, and can cost up to £4,000.
You may take professional help from a corporate service provider in United Kingdom to process the trademark.
Register Your Business
To legalize your business, you have to register it with the Companies House. If you’re setting up a private company, this registration simultaneously registers you for corporation tax. You will need to furnish personal information, regarding the business, shareholders, and guarantors. You can register online or through their offices, paying £12. The company registration usually takes around 24 hours to complete.
If you don’t already have a team to develop the solution you have in mind, you can always engage talents with matching skills and competencies. However, organizing a software development team can be time-consuming and costly. If you have time and budget constraints, it would be more advantageous to outsource talents.
Raising the funds to start a software development business in the UK can be challenging. Luckily, various organizations, incubators, and accelerators are looking to support various tech startups. If you’re confident in your idea and business plan, getting investors to fund your venture would be straightforward. And what’s good about having these organizations backing you is that they can expedite and smoothen the launching of your business.
Licenses and Permits to Starting a Software Development Business in the UK
Software development companies have several legal and regulatory considerations to address when developing new products. Some of these legalities include:
- Intellectual property rights
- Consumer protection
- Responsibilities towards employment practices
- Data protection and privacy
- Age ratings and classification
- Advertising laws
- Consumer protection
Furthermore, some of the licenses you may need to acquire are enumerated below. Acquiring these licenses would depend on your activities, the nature of your products, and where you’re located in the UK.
- Notification to process personal data
- License to use and broadcast copyright music on the radio
- License from the Mechanical-Copyright Protection Society
- Public surveillance license
Advantages of Starting a Software Development Business in the UK
The United Kingdom is a good place to start a software development company. It has all the talents, networks, facilities, and support you need to succeed in this line of business. In fact, according to NimbleFin consumer research, the UK is a top ideal location in Europe for tech startups. And the country has a lot of opportunities for software development companies to start and grow.
The government provides startups with grants and funding schemes to encourage innovators to come out of their shells. These supports include grants from the Department for Business, Energy & Industrial Strategy. There are also available startup loans, Innovate UK funding competitions, and capital support from the London Co-Investment Fund, which startups can take advantage of.
Furthermore, software development companies in London can enjoy a tax credit of up to 130% on their R&D activities. You can claim these tax credits within two years from incurring such costs, by incorporating your enhanced expenditure into the full company tax return form. Additionally, software startups can also enjoy tax reductions under the Patent Box Scheme. The scheme allows for a 10% reduction in their corporate taxes if they develop and sell patented products. To claim this deduction, you have to qualify under its list of qualifications, and fulfil its conditions like successfully filing for a patent and earning profit from it. Acquiring UK company incorporation services would also give you direction on which grants and benefits you can take.
Company Registration Services in the United Kingdom
Overwhelmed with all the steps you have to take before you can launch your business? Get 3E Accounting’s assistance today! We are a top corporate service provider in the United Kingdom. Whether you want to create an agency or a corporation for your business idea, our competent team can provide procedural assistance and legal counsel in starting your venture.
Contact us now to learn more about the registration procedures for your specific type of business.