A record 581,000 new startups registered with Companies House last year, according to new research.
London led the way for entrepreneurs with more than 180,000 new companies.
Other startup hotspots for entrepreneurs included Birmingham, with more than 18,000 new companies and Manchester just tipping the 13,000 mark for startups.
Unsurprisingly, the number of startups was clustered around the major cities.
Away from London, Manchester and Birmingham, the other popular places for entrepreneurs to start a business were Leeds and Sheffield (14,780 startups); Bristol and Cardiff (14,457) and reading, Portsmouth, Brighton and Guildford (27,257).
“Strides forward in technology are making startups easier, quicker and cheaper than ever,” said Luke Johnson, chairman of the Centre for Entrepreneurs, which prepared the figures.
Business failures decrease
The number of businesses closing is dropping – Companies House revealed a 6% drop in corporate failures down from 253,000 to 238,000 in 2014.
However, although the number of startups is rising, the figures are out of kilter with HM Revenue & Customs (HMRC) statistics for the Seed Enterprise Investment Scheme (SEIS), which offers tax breaks to investors in startup businesses.
Although the scheme has been open since April 2012, only 1,100 companies have applied for the tax breaks to encourage investors to take equity stakes in their businesses.
Just over 600 were in the capital and south-east, where the majority of entrepreneurs launched their businesses.
But in comparison to the number of new companies registered, the take up for SEIS is small.
Investors can claim a 50% income tax reduction and capital gains tax reliefs for investing up to £100,000 in a SEIS company. The value of the shares grows tax-free over the three year investment term.
SEIS tax breaks
If the company fails, the investor also qualifies for loss relief against other income.
The scheme was introduced by Chancellor George Osborne to help entrepreneurs find funding for startups.
“SEIS has raised more than £85 million in much needed seed capital for entrepreneurs during the past three years, but more companies could enhance their odds off survival by joining the scheme,” said an HMRC spokesman.
To date, no one is quite sure how SEIS companies have performed as the first investments end their 36-month term in April 2015.
If the figures show SEIS in a positive light, more investors could be tempted to pump cash into startups – however, if the figures fall flat, many investors may reconsider becoming involved in the scheme.
