Back to Insights Back to Insights

In today's digital age, technology has become an indispensable part of our lives, and IT service providers and consultants have emerged as the superheroes who make it all possible. 

From small businesses to large corporations, and even households, the reliance on computers and the internet is only increasing with time. If you’re someone who is passionate about technology and interested in starting your own IT company, there has never been a better time to take the plunge. 

However, before you embark on this exciting journey, there are a few crucial things to consider. This article will guide you through the steps involved in setting up and running a successful IT company that meets the ever-evolving needs of the market.

What do IT service companies do?

IT companies and consultants provide an enormous range of services, including:

  • Monitoring services
  • Network services
  • Creating and running disaster recovery plans
  • Operating and monitoring system security
  • Providing data and software storage
  • Software development
  • Helpdesk support services
  • Risk assessments
  • Resolving major IT issues for their clients
  • Data processing and protection

Why do companies outsource their IT services?

Information technology systems are incredibly sophisticated and most businesses have neither the money nor the expertise to take care of it with a dedicated in-house team.

For example, cybersecurity is a major issue for all organisations and cybercriminals get quicker and smarter every day. Most businesses don’t t have the resources to keep on top of ever-changing cybersecurity threats. 

Outsourcing cybersecurity and other IT services ensures benefits from a proactive, specialist, partner who understands their business operations and can work strategically to prevent problems from occurring and help boost productivity.

How to budget for an IT service company?

Most of the information you need to create a start-up budget will come from your business plan. You’ll probably have limited capital available until you start selling your services, so every penny must be spent wisely. 

Work out what you need to get started, for example, equipment, servers, software licences, insurance, a commercial property lease or licence, legal advice, employees, and marketing. 

You may need to take out a business loan or seek investment to raise capital. If you do finance your business through borrowing, you will need to factor loan repayments into your costs. You can find out more about how to create a budget plan here.

What qualifications do you need to set up an IT company?

When starting a tech company, you may need some background and experience in different types of software and hardware support and maintenance. However, a computer science degree from a university isn’t a prerequisite for getting potential customers and starting a business. 

Being an IT company business owner requires an innovative mindset, people skills, and a desire to provide exceptional service. These are much more important than formal qualifications to set up this type of business. 

Should I focus on a niche IT sector/market?

The IT space is crowded but the need for skills and expertise is growing all the time, and every day there are more and more companies that decide to outsource their IT services. 

Focusing your business idea on a niche IT service or particular market sector is a great way to become known as the ‘go-to’ company in a certain area. Much depends on the extent of your ambition and personality – would you get bored doing only a limited number of products or services? 

Remember, many businesses start off serving a wide market and naturally narrow down over time. Doing some market research could be a good idea if you want to get a grasp of the current landscape of the area you wish to work within.

What are the laws and regulations owners of IT companies need to be aware of?

When starting the process of setting up a new company in the UK, you first need to decide what type of limited company you want to set up. If you’re setting up a limited company in the UK the most popular route is a private limited company.

You’lll then need to register your company with Companies House. This will require you to draft Articles of Association (you can use Lawbite’s Articles of Association template ) and if there is more than one shareholder, it’s advisable to have a Shareholders Agreement.

During your journey, you’ll also need to become familiar with various regulations such as the UK GDPR, the directors’ duties under the Companies Act 2006, health and safety laws, employment laws, HMRC obligations, and consumer laws to name but a few. 

This may sound overwhelming but don’t panic! We can help you with the company registration process and ensure all your legal documents are working in your favour.

How do I sell IT services to small businesses?

There are several avenues you can use to reach potential customers. 

Advertising is expensive and often cost-prohibitive for start-ups, so consider investing your time in content marketing, for example writing interesting, helpful blogs and posting them on your website. Social media is another key way to reach clients, as are good, old-fashioned, face-to-face networking events. 

Before you launch your IT service business, study your competitors carefully to get an idea of their pricing. You don’t want to be the cheapest option; however, until your brand is established, you will need to keep your pricing at the lower end. 

Get legal assistance from LawBite

Setting up and running an IT company can be a challenging but rewarding experience for entrepreneurs. It's important to keep in mind that legal issues can arise at any stage of your company's growth, and it's essential to have the right legal support in place to ensure compliance and protect your business interests. 

LawBite experienced lawyers have helped numerous early-stage startups and small businesses achieve their long-term commercial ambitions. 

Book a free 15 minute consultation or call us on 020 3808 8314 to find out how we can support you in starting and the day-to-day running of an IT company.

Additional resources

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

Free legal support for businesses

The LawBite Free Essentials Plan acts as your very own legal assistant, ready to provide expertise and guidance on the common legal issues that SMEs and businesses face.

Free Templates
  • X 3 legal document templates
  • Drafted by our expert lawyers
  • New documents added every month
Legal Healthcheck Tools
  • Business-specific surveys
  • Understand how compliant you are
  • Checks in, GDPR, IP, Brexit and more
Resources, Webinars and Articles
  • Access to the latest LawBite events
  • Legal guides for businesses
  • Smarter business law videos