Thinking of starting a business?

Hospitality Hub > Starting Out

It can be a real minefield to navigate when you’re considering starting a business but it doesn’t need to be. There are some things you MUST do and others are optional.

Sole Trader vs Limited Company: Pros & Cons

Choosing the right structure for your business affects everything from tax and liability to how you’re perceived by clients. Here’s a quick comparison:

Sole Trader


Pros:

  • Simple and inexpensive to set up

  • Fewer reporting requirements

  • Full control and access to profits

Cons:

  • Personally liable for business debts

  • May pay more tax as profits increase

  • Can appear less credible to larger clients

Limited Company

Pros:

  • Limited liability – your personal assets are protected

  • Potentially more tax-efficient

  • Often seen as more professional and established

Cons:

  • More admin and regulatory responsibilities

  • Annual accounts must be filed with Companies House

  • Profits aren’t immediately accessible – they belong to the company

There are also other structures that may be better suited to your needs but sole trade and limited company are the most common set-up.

Practicalities

Running a hospitality business involves more than great service — there are essential practicalities to get right to stay compliant and protected. Key considerations include:

  • Public liability insurance – protects you if a guest is injured or their property is damaged.

  • Employers’ liability insurance – legally required if you employ staff.

  • Food hygiene certification – needed if you prepare or serve food; inspections are carried out by the local authority.

  • Premises licence – required to sell alcohol, provide entertainment, or serve hot food and drink late at night.

  • Health and safety compliance – includes risk assessments, staff training, and maintaining a safe environment.

  • Music licences (PPL/PRS) – if you play recorded or live music on-site.

Getting these essentials in place helps build trust with customers and avoid costly legal issues.

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Payroll & Tronc: Getting It Right

Payroll in hospitality can be complex, especially with variable hours, seasonal staff, and tips to manage.

Key areas to consider:

  • Weekly/monthly payroll – including zero-hour and part-time contracts

  • Real-Time Information (RTI) submissions to HMRC

  • Statutory pay calculations (e.g. sick pay, holiday pay, parental leave)

  • Pension auto-enrolment setup and compliance

  • Tronc scheme setup and management – for fairly distributing tips while remaining tax-efficient

  • P45s, P60s, and payslips issued promptly and correctly

Managing staff pay and tips correctly builds trust and protects your business.